Case Study – Business Turnaround / Transforming Finance Function

Business plan


We were called in when the business owner recognised all was not well, primarily due the Cash not reflecting the apparent profitability of the business, despite turning over £7m pa.

Key achievements:

* Established accurate Balance Sheet start point, after finding significantly over-valued Stock and under provided warranty provisions.

* Replaced Auditors following Prior year adjustment to Stat accounts.

* Transformed the Finance function to produce Accurate, Timely and meaningful monthly Management Accounts

* Generated reliable information for the Leadership team to make better strategic decisions

* Business turned around from a loss of c. £400k to £500k Profit

* Gross Profit percentage increased from 32% to 50%.

* Designed and implemented a company-wide Profit Share scheme

* Developed employee engagement program to understand basic finance

The business was not well served with monthly accounts which were confusing and not accurate. Indeed, the actual amount of Profit earned in a year was only determined 9 months after the year end by the Auditors. Therefore, the business did not benefit from monthly accounts it could trust, so necessary decisions were not taken. In particular, product specification changes lead to obsolete stock not being written down, product warranty costs not being identified and no tracking of product margins being applied. Therefore the management of the business was unable to see the wood from the trees and the results suffered.

Identifying errors in the Balance Sheet was not good news, however this was essential in establishing the correct start point. We continued by Transforming the Management Accounts, so providing clarity on the amount of Gross Profit being earned on each product, which in turn enabled the Leadership team take critical decisions on required cost reductions and selected price increases. The combination of Accurate, Timely and Meaningful Management Accounts and an agile and responsive Leadership team lead to the turnaround in the business, with a Loss of £400k being turned into a Profit of £500k over a 3 year period.

“Since joining the Leadership Team, our VFD James has made a significant contribution in turning the company around by transforming the finance function from a position of inaccurate reporting and lack of clarity to one of clear management reporting from which the Leadership can (and do) take strategic decisions. Examples of this are weekly cash and profit forecasts, a robust budget with which the Leadership Team has complete buy-in and monthly management accounts we trust. In addition James acts as an invaluable sounding board during strategic decision-making.”

Val K – MD and Owner