Case Studies

Improving systems then raising equity at an online retailer

Background Our clients never run out of cash. This case study demonstrates what can go wrong when the finances are not under the control of an experienced FD and how we resolve this. Our client is an on-line retailer of luxury-brand children’s clothes and toys. Following an unsuccessful systems change, the company was struggling with stock delivery and management, which adversely impacted cashflow, which resulted in the need for immediate additional funding. The company was unable to provide adequate financial information and forecasts to potential investors.
Appointment The company did not have a Finance Director, and the Financial Controller was working his notice period prior to relocating overseas. FD Solutions were appointed and responded to the urgency by providing two people (Roger Hearn and Mark Guilford) to 1. Develop a forecasting model; and 2. Manage all aspects of the cashflow.
Forecast model Roger, the MD and the senior management team, worked 24/7, to quickly understand the company’s operating model, and to develop a three-year forecast which could be presented to potential investors.
Manage cashflow Mark managed the finance team, and recruited interim staff, to process the considerable backlog of purchase invoices. He worked with the Purchasing Director to negotiate short-term payment plans with suppliers. He developed a daily cash flow model, for a rolling three-month period, and controlled daily payments to priority creditors. He worked with the HR Manager to quantify potential redundancy payments, and to facilitate consultation meetings with employees. He consulted with the company’s insolvency advisor to ensure that the directors complied with legal requirements.
Completing the re-financing Other colleagues from FD Solutions worked with one of the existing Private Equity investors to help present this to potential investors. Mark and Roger met with the chosen investor and explained the company’s funding requirements and its future profitability. Mark worked with the MD to complete their due diligence questions.
Integration with new parent company Following the sale of the company, Mark helped to integrate the company’s financial and operating systems with those of the new parent. The company is now prospering.