A recovery process can only be successful if all stakeholders accept a recovery concept and if on top of that, management is trusted. An interim CFO can help to achieve that!
The Assignment for the Interim CFO Restructuring
A motor vehicle supply company with an annual revenue of 60 million euros had established itself on the market decades ago and had thus not adapted to developments of the market and competition. In addition, in many areas personnel costs were too high. Apart from that, parts of management had lost the trust of their main shareholder. Monthly losses reached 40,000 to 70,000 euros. To the financing banks, the additional loss of a line at a trade credit insurer meant an impending additional drawdown of millions. This new borrowing requirement for newly created claims made a restructuring assessment necessary. Moreover, the stakeholder’s trust in management had to be regained. A HANSE Consulting restructuring team was quickly assigned the task of assessing the recovery capacity. It soon became apparent that an interim manager had to be hired simultaneously. HANSE Interim assigned a seasoned Interim CFO who had vast experience in the field of restructuring to do the job.
The Challenge
The interim CFO was already included in the recovery team during the conceptual phase of the creation of the recovery concept.
He assumed the position of commercial manager and CFO and monitored all of the company’s floodgates.
Independently of what the recovery concept was to look like in a few weeks, the company’s financial and operative scope of action in times of crisis was increased early on.
Since every phase of the process presented different specific key points, it was all the more important to include customized instruments into the recovery process that would help control the liquidity and the result. The key to saving time during the crisis was to implement the analysis and the concept at the same time, in order to hedge the operative business.
It was absolutely necessary to adapt the organisational structure of the company and to eliminate certain weaknesses. By adopting the approach discussed above, it was already possible to start these processes during concept creation.
The plan was to implement the recovery plan in the next phase. The interim manager was to manage that process. Another plan was to let the interim manager and existing management personnel work together in an effective team to accelerate the process and increase its impact.
Among the principle tasks of the interim manager were classical financial tasks such as establishing weekly reporting or controlling payments from receivables onto accounts of a separated additional credit line.
At the same time, a recovery concept, including a selection of significant recovery measures was established:
- Closing unprofitable locations
- Concentrating exclusively on highly profitable products, eliminating unprofitable products and clients
- Selectively increasing prices
In his position as commercial manager, the interim manager additionally took on the following tasks:
- Partially renegotiating supplier’s contracts
- Realigning the sales structure in the internal and external sales force
- Appointing new sales management personnel
- Outsourcing logistics
- Reducing staff in the administrative department
The Result achieved by the Interim CFO Restructuring
Thanks to the eartly inclsion of the interim manager into the process of recovery controlling and, at the same time, implementing measures, the recovery process was completed 3 months earlier than had been originally planned. This approach enabled the company to avoid about 300.000 euros in losses and helped to build the trust that was needed for additional credit lines.
Conclusion
An experienced CFO who has a good rapport with all stakeholders has the ability to drive a company forward and regain trust with banks during the crisis and in cooperation with the recovery consultants. In conclusion, the interim manager significantly contributed to the success of the project.
