Company with an interim part-time CFO requirement
Our client was a travel business, based in London, Manchester and in Europe, which had been trading for over 15 years.
It operates as a travel agency and specialises in providing air fares to mainly not-for-profit organisations. Turnover in 2007/08 for the UK business was £47 million with EBITDA of £1 million.
The incumbent financial controller had exited and the finance team was out of its depth, giving rise to inadequate management information and control.
The existing systems and reporting procedures had sufficed while the business was growing and profitable, but were inadequate when faced with a declining market and investment in a new European operation.
Tighter margins, increased overheads, investment in Europe and poor credit control all contributed to a situation where overdraft limits were being breached on a monthly basis, added to which the lack of forecasting had prevented visibility of the issue and allowed the owner no chance of managing the relationship with the bank.
Introduced by BDO
FD Solutions were asked to provide the services of a Chief Financial Officer pending the recruitment of a permanent CFO.
Improved processes
We supplied an FD on a part-time basis to address the priority issues:
Cash flow - He quickly improved the relationship with the (supportive) bank manager by providing visibility of short-term cash requirements through a daily cash flow forecast. Thereafter, he concentrated on improving credit control and reporting by better utilisation of existing accounting and front-end systems and providing improved procedures for sales and credit control teams.
Forecasts - We constructed an integrated forecasting model (P&L, BS and Cash Flow) to reflect the whole business – including the Belgian office. We worked with department heads to ensure ownership of budgets and management’s understanding of the impact of their strategic decisions.
Statutory & regulatory - Our FD managed the production of year-end accounts for the group and the improvement of regulatory reporting.
Advice on potential investment - We discussed a potential major investment opportunity with the owner, advising him not to proceed until such time as the finance departments of both the UK and Belgian businesses were completely under control.