Why the Interim CFO Assignment came too late
The situation
An established automotive supplier with annual revenues of around EUR 60 million had failed over an extended period to adapt consistently to changing market and competitive conditions. The effects of the pandemic, uncertainty surrounding the transition to battery-powered vehicles and declining order volumes led to a noticeable drop in revenues.
At the same time, management decided to maintain existing structures. Short-time work or government support measures were deliberately not used, and employees continued to receive full pay. Combined with a lack of commercial transparency, this resulted in a high cash burn rate. An emerging liquidity bottleneck went unnoticed for too long.
Only when a low six-figure liquidity requirement was identified did management decide to commission a restructuring report. During this process, it quickly became clear that additional operational support would be required.
The role of the interim manager
Based on the advisors’ recommendation, an interim CFO from the HANSE Interim Management network was appointed. The objective was to quickly create transparency around the company’s financial situation, stabilise commercial structures and establish a reliable basis for decision-making.
In addition to the CFO role, the interim manager took responsibility for the commercial oversight of the restructuring measures. This included monitoring all financial transactions and processes at the headquarters as well as at the international subsidiaries in Spain and the United States.
Establishing a clear picture of the actual liquidity situation proved far more complex than expected. Key challenges included:
- outsourced accounting functions
- an inadequately maintained ERP system
- missing definitions of commercial processes
- a lack of effective cost and cash management
- insufficient data exchange between group entities
The decisive insight
After several weeks of intensive analysis, it became clear that the initially assumed liquidity requirement significantly underestimated the true situation. Instead of a manageable gap, the company was facing a liquidity shortfall amounting to several million euros.
Options for short-term liquidity support were not available. Neither the release of liquidity-relevant assets nor additional financing or shareholder contributions were feasible.
Under these circumstances, filing for insolvency could no longer be avoided.
The interim CFO subsequently supported the preparation of the insolvency documentation in close coordination with legal counsel and ensured a structured handover to the provisional insolvency administrator.
Once responsibility was transferred, the interim mandate came to an end.
What became clear during the project
This case highlights how critical commercial transparency and functioning management instruments are in crisis situations. Missing key indicators, inadequate systems and the late involvement of external support can lead to a rapid loss of viable options before they are even recognised.
Interim managers can help establish structure, transparency and clarity. However, their impact depends largely on being involved at an early stage.
Conclusion
An experienced interim CFO can provide stability even in highly challenging situations, rebuild trust and support the development of viable perspectives together with restructuring advisors. This requires that early warning signals are recognised and addressed in time.
Not every crisis can be resolved. But the earlier companies act, the greater the scope for shaping outcomes.
Best regards
Your HANSE Interim Management
Andreas Lau
