£2.5m Increased Cash CashBuilder Case Study

THE SITUATION

The CEO and a key shareholder had to make a small cash injection into the business in early 2017 to pay suppliers. Overall, the business was growing strongly and was profitable.

In the CEO’s words “I don’t understand what has happened. We are growing, making profits and this shouldn’t happen”. We were asked to look at the business and find out what was wrong.

THE PURPOSE OF THE PROJECT

To increase the cash balance of the business and the CEO’s and his teams’ confidence in the business.

THE PROJECT

Emerson Nash worked with the client team to find out what had gone wrong. We looked through the data and spoke to staff members until we had gained a very good understanding of how the business was run, who was involved in managing cash and what could be done to improve the situation.

Our work included:

  • Increasing the focus on project administration to improve invoicing
  • Creating a significant focus across the management team on getting paid on time, including weekly aged customer debt reviews, highlighting problem accounts and identifying the next steps to resolve outstanding problems
  • Building bespoke reporting to enable granular aged debtors reporting
  • Hiring a dedicated part time Credit Controller to increase the focus on debt collection
  • Changing a few members of the Finance Team to increase the skill levels within the team

Getting paid on time is a business-wide activity, usually led by the Finance Function.

We helped all members of the wider team understand how important this was, how they contributed to the process of getting paid and how to make sure they adhered to this at all times.

THE OUTCOMES

The cash balance went from zero to over £2.5m within a year.

The cash increase was achieved through embedding good working practices within the business, rather than reducing investment in plant or other areas. Investment actually increased during this year.

The business gained confidence to go after larger projects, with larger risk and reward profiles. The CEO and the management team feel secure in that they have large cash reserves should the business need to deal with unexpected events.

RETURN ON INVESTMENT (ROI)

 

Value created

Return multiple

Return over 1 year

£2,500,000

Over 5 times

Return over 3 years

£2,500,00

Over 15 times

We measure the return on investment as the ratio of what value the client receives compared to their investment with us.

About the Business

  • Provides services to a large number of national business in the construction sector
  • The business have been growing consistently, from circa £3m in sales in 2004 to £20m in 2019 and employ nearly 100 people
  • Family owned business, well known and respected and operating on a national level

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