Cash Flow Management

Most business failures can be attributed in whole or in part to a lack of working capital. Good cash flow management assists a business in:

• Operating within bank facilities; avoiding stressful conversations with lenders.
• Maintaining sufficient headroom to deal with slippage or the unexpected.
• Improving balance sheet ratios – enables/supports additional capital raising.
• Lowering costs to business as facilities not maximised – lower borrowing costs.
• Avoiding covenant breaches and therefore punitive fees.

Kingpin can advise businesses in all aspects of cash flow management, from small start-up businesses to mature SME’s. We can assist by:

• Reviewing current cash flow management procedures.
• Building a suitable and robust model for your businesses needs.
• Advising on easy “wins” that will provide you with short and medium term gains.
• Negotiating sustainable payments terms with key suppliers, stakeholders and landlords.
• If necessary negotiating Time To Pay arrangements with HMRC on your behalf.

Business Plans

Business plans are an integral part of creating any new organisation and are a fundamental tool for management teams working to rescue an ailing business and handling ongoing financing. Good, well thought out business plans, supported by a robust financial forecasting model are essential components for success.

Stricken firms are often guilty of coming up with exotic business plans that are all optimism and hope, showing an unrealistic “hockey stick” financial forecast that only serves to erode the credibility of management with potential financial stakeholders.

The Kingpin team offers a wealth of experience in authoring business plans and the underlying financial models on behalf of management and all kinds of stakeholders such as shareholders, lenders, landlords and pension schemes. We can assist in:

• Consultation with management and robustly reviewing business plans for consistency and clear logic.
• Advising on the suitability of the underlying assumptions, in particular highlighting any vulnerabilities.
• Advising, where appropriate, on suitable changes to the forecasting model, which may include;
  • adjustments to the timing of any cash flow items,
  • introduction of best and worst case outcomes,
  • application of sensitivities to reflect inherent forecasting risks.
• Building appropriate models.
• Advising on format, detail, and content when seeking to raise funds/extend facilities etc.
• Coaching and advising management when engaging with recovery bankers and stakeholders and/or their agents to ensure the fiduciary duties are adhered to.

Raising Business Finance

It comes as no surprise that organisations in difficulty, even with a good business plan and experienced management, often experience huge difficulties in raising finance from the traditional bank lenders. 

Kingpin Advisory have a network of contacts within private equity firms, invoice factoring and discount houses and other financial intermediaries. We are not financial brokers nor do we earn commissions from any introductions. Our role is to assist management in identifying the type and sources of finance and effecting such introductions as are appropriate. 

Credit Control And Sales Ledger Management

We often find that businesses claim they practice good working capital management and talk about their excellent credit control procedures. On further inspection we can discover that in truth they just have a member of the accounts team tasked with chasing overdue debts, and the process is relatively ‘de-skilled’.

Without proper monitoring it is all too easy for target driven sales departments to sell to your worst debtor, or for good customers to slowly push for longer credit terms and for legal action to be delayed for fear of alienating clients. Separately or cumulatively all these factors lead to pressure on working capital, often dealing a potentially fatal blow to businesses under pressure. 

Remember there are two sides to every story and effective credit control also involves ensuring that the credit terms offered by suppliers are maximised, excess capital is not tied up in overstocking and creditor relationships are well managed even in times of financial distress by adherence to payment due dates.

Kingpin assists businesses in improving their credit control procedures by undertaking some or all of the following:

• Operational reviews to identify and assist in implementing improvements.
• Utilising Key Performance Indicators (KPI’s) such as debtor/creditor days and the introduction of systematic bad debt reviews.
• Setting up debt recovery procedures and litigation protocols.
• Carrying out commercial due diligence.
• Comparative analysis of KPI’s with sector/industry.
• Considering the suitability of invoice discounting, factoring and stock finance.

Exit Strategy

It may seem odd to include Exit Strategies under the Business Rescue heading, but read on and all will become clear. Businesses have an inherent life cycle and sooner or later the markets mature, competition increases, margins erode and it becomes difficult to sustain viability.

Preventing decline can be addressed by such actions as strategic acquisitions, launching new products, exploiting new markets or sales channels, implementing management changes and cost saving, including redundancy programmes. However sometimes, elements of the business may become non-core or a “lame duck” and end up being a financial millstone around the neck of the rest of the Group.

In such cases consideration should be given to the appropriate strategy for the non-performing areas, so releasing drag on the rest of the group. Such strategies usually fall within three main headings:

1. Fix- management may decide to implement a refinancing or restructuring either at a balance sheet or operational level.
   
   
2. Sell- a disposal of the business either as a normal corporate transaction or as a distress sale (dependent upon the cash drain caused by the under-performing business).
   
   
3. Close - initiate a formal insolvency process thereby drawing a line on the capital being absorbed by the loss making business.

Kingpin Advisory are experienced in assisting lenders, management and key stakeholders on assessing and implementing the available exit options, the likely financial recovery and the practical impact on the Group/Company or associated businesses of implementing any proposed strategy.