In the ever-dynamic field of labour hire and recruitment, rapid growth can often come with its own set of challenges. One of our clients, a niche business in this sector, was a prime example. Small yet sprightly, the company had seen accelerated growth by successfully securing contracts with several blue-chip clients and had expanded its operations across multiple states. However, it soon faced a formidable obstacle: a major client entered administration, leaving a sizable debtor balance that suddenly seemed irrecoverable. The primary concern shifted to assessing the business's long-term viability and crafting a strategy that could navigate through the looming financial storm.
A Collaborative Strategy for Business Resilience
Understanding the gravity of the situation, Ascern Advisers collaborated closely with the company's management team to formulate and implement a multi-pronged strategy. The central objectives were clear: secure and protect cashflow and reboot operational performance.
Short-term Cash Forecasting: A Navigational Aid
The first imperative was to get a firm grip on the financial pulse of the company. To this end, we implemented a meticulous 12-week cash forecasting system. This near-term financial map proved invaluable for steering the company cautiously yet effectively during these turbulent times.
Debt Recovery Initiatives: Recouping the Irrecoverable
Next, we turned our attention to the daunting task of debt recovery. Utilising formal avenues, we pursued this as much as possible through the client's administrators. While not all funds could be recovered, this initiative significantly mitigated the impact of the loss.
Debtor Management: A Tighter Rein on Receivables
We also fine-tuned their debtor management processes. This included tightening up other outstanding customer debts and reducing the collection days. A pivotal part of this exercise involved training operational staff on managing new customer terms effectively, thus boosting the company’s receivables turnover ratio.
Operational Expense Review: KPI-Driven Efficiency
Further, we introduced KPI reporting mechanisms to track operational performance by site. This granular approach to cost analysis allowed the management team to identify inefficiencies and implement targeted cost-saving measures across the business.
The Outcome: Averting a Business Catastrophe
While the impact of the business interruption was palpable, leading to a reduction in the company’s size, our strategic turnaround approach ensured that this setback did not morph into an existential crisis. Through focused financial management and operational efficiencies, the company continued its trading activities despite the adverse conditions.
This tale of overcoming financial adversity serves as a compelling testament to the efficacy of astute financial and operational planning. It underscores how well-crafted strategies, when executed effectively, can help a business not just survive but also build a foundation for future resilience — a commitment we at Ascern Advisers steadfastly bring to all our client engagements.