We were introduced to the company by the lender, who provided the company with an invoice finance facility, following concerns arising from an audit carried out by the lender. The audit had identified discrepancies which had resulted in the lender increasing its reserves by c£900k on the facility of £1.5m.
Armstrong Watson were instructed to carry out debtor verification and comment on the overall viability of the business. This was done onsite at the company’s premises.
The debtor verification process highlighted issues with the company’s credit control process, and a lack of understanding as to how the facility worked. Indeed, there was nobody in charge of credit control, which had meant that there was no active debt collection process in place, leading to the business having no cash availability in its facility for ongoing trading.
Working with the finance director, we established the cash position and liaised with the lender to identify ongoing cash requirements to continue trading. At the same time, we assisted the company in implementing a credit control process, which resulted in debtors being paid and the bank’s position improving. We also liaised with the different suppliers to manage their expectations and ensure continuity of supply in the short term.
Over the course of six weeks, we assisted the business in collecting in over £1.2m of outstanding debtors, helped the directors to manage the company’s cash position so that they could continue trading and managed the bank’s exposure back down so that the company was able to refinance the debt with another lender.
For more information on Viability Reviews & Exit Strategies, please visit our website here.