case study - turnround practice

Heating contractor

Stakeholder: lender and shareholders.

Business: the installation of heating and plumbing fixtures in new build projects. Turnover - £3.5m.

Objectives: (i) to establish reliable financial accounting and management reporting; (ii) to assess the current solvency of the business and for the immediate future; and (iii) to assist the owner managers in planning for a profitable future.

Process: the initial priority to establish the financial position of the company involved an independent verification of the balance sheet and the replacement of the Finance Manager. Legal advice was then sought on the solvency of the business and the actions required by the directors. A tight tactical cash management process was implemented and independent accountants were employed to replace the IT accounting system and to prepare monthly management information. The process for tendering for new contracts was reviewed and the pricing parameters revised. Overheads were reduced by 30% and gross margins improved by 30%.

Outcome: the directors' knowledge and command of the economics of the business has increased significantly and both cash generation and profitability have improved.