Bridging the Gap in Financial Leadership
Strong financial leadership is essential in every business so when the CFO / FD is missing, the company and its executive team can really suffer. That’s where an Interim CFO / FD comes in, bridging the gap between finance executives. By providing financial expertise and a reassuring presence in the boardroom, an Interim FD (IFD) is worth their weight in gold. This business success story demonstrates the value a Secantor IFD added at fast-growing recruitment business when they suddenly found themselves without a CFO. Having stabilised the finances, our IFD was retained by the incoming permanent CFO to undertake several specialist finance projects allowing him to focus on financial strategy.
Background
The client, a successful fast growing recruitment business supplying both Temps & Perms in UK and several overseas markets became a victim of their own success and were suffering from severe cashflow pressure. A leading firm of Accountants had investigated and reported on behalf of the incumbent Invoice Finance (IF) funder during Covid lockdown and identified various irregularities created by the former CFO who had raised invoices/credit notes to alleviate funding issues. This was finally sorted out after four months by a temporary Finance Director who sadly had to resign for health reasons. The situation revealed by the Accountants was a major challenge for the founder directors causing severe shortage of funds and lack of trust between them and the funder who intended to exit quickly and required the facility to be transferred to an alternative funding provider.
Emergency Requirement for an Interim FD
There was an urgent need for a widely experienced Finance Director who could take an immediate grip of the business situation and secure a successful recovery. Our Interim Finance Director (IFD) was available at short notice to start with a brief hand-over meeting from the temporary FD. At this time there were still weekly meetings with the funder & the reporting Accountants to authorise payments required for the week including contractor payroll, staff payroll and any supplier payments. The process of moving IF providers had also commenced with the provision of various information to the prospective new IF funder.
In addition to our IFD, the business had internal staff of a Financial Controller and a part time administrator. All other accounting & bookkeeping was outsourced. However the business had outgrown its back office function and was struggling to get meaningful and accurate information from its current finance system. The founder directors had previously identified and chosen their new permanent CFO from old industry contacts however he was not available to commence for a further three months.
Project 1: Cash flow management and forecasting
The business was constantly struggling with shortage of cash and often had difficulty paying payroll and critical suppliers. The debt owed to HMRC was £1.1m so a time to pay arrangement was established. The critical tasks were:
Managing a total funding facility of £3m (which later rose to £4.2m) successfully including daily cash management & forecasting and careful creditor management.
Transitioning from the old to the new funder within one month whilst continuing to pay weekly contractor payroll.
The new funder for UK was factoring a CHOCCS facility and therefore required more careful management to ensure maximum lending was achieved.
Working with IF funders in Netherlands, Switzerland and for USA to maximise available cash overall especially overcoming significant difficulties with the new funder in Netherlands due to poor accounting in the past.
Our IFD was initially taken on for three months to hold the fort prior to the new CFO taking up the role. During this time our IFD coordinated & communicated with directors and the new CFO, urgent decisions & actions required to maintain an effective finance function. The new CFO, once in post realised the crucial role of our IFD and requested a further project for at least six months to:
Identify and scope the role for a new full time Treasury Manager to manage cash across Group including the Swiss, Dutch and US entities which were fast growing each with their own factoring to manage.
helping recruit and train the new Treasury Manager, transitioning the IF relationships and completing the full handover to the new permanent incumbent
This enabled the CFO to fully focus on supporting the owner directors in developing business & financial planning and strategy. After six months and with the funding of the business safely secured the CFO requested our IFD to take responsibility for two more major projects to support the substantial and growing business.
Project 2 Development of the in-house finance function from an outsourced accounting service
The key tasks were:
Helping to recruit an internal finance team of seven staff, providing training and support where required.
Working on historical records to cleanse data & correct the prior year’s accounts.
Transitioning functionality from outsourced team to new internal team
Supporting the team as they bonded together.
After four months the business terminated the outsourced service to allow the new internal staff to fully manage the complete finance function. During this time our IFD commenced the next project - to implement a major new finance system simultaneously.
Project 3: Development of new finance system
The business had been using a small proprietary accounting system which was limited and struggling with the multicurrency requirements of the group and could not give the business the analysis it needed to make key decisions.
A new more comprehensive system was selected and designed to give the required analysis while still able to connect to other key components e.g. pay and bill system, expenses system and payment files across various entities and countries.
Following design of the system, our IFD created and cleansed initial data files from poor data on previous system and other recording mechanisms including:
Chart of accounts
Suppliers
Customers
Banks/credit card information
Employee information
Companies
Analysis set up (i.e. by team/ division/employee)
A key element was the design of MI reporting systems
Working with third party systems to obtain required information/data transfer e.g. pay and bill, expenses system and bank payment files
Working with the new team to ensure correct training and support and prepare staff towards going live
Working to achieve fully successful implementation completed after a further eight months and follow up to ensure monthly management accounts are facilitated.
Setting up invoice templates, reports and budget uploads and comparative reports.
Ensuring consolidation correctly set up, plus VAT etc for required entities.
Positive Outcome
The Directors and CFO had used the services of our IFD very successfully for 18 months on three major projects. This had become a vital support enabling the CFO to work with the owner directors on the growth strategy for the business to increase profits toward an exit plan. Our IFD had created an excellent working relationship with the directors & CFO and built a solid bond of trust which bodes well for the future. As various other projects emerge our IFD is seen as part of the management team to take responsibility for further successful projects.
Owner’s Quotes
“Thank you so much for all your work for us. It has certainly been challenging and you always presented a calm front, which helped, along with brilliant work”.
“Secantor provided the senior business & financial support my fellow director & I needed at a very critical time for our company. I cannot recommend the incredible service we received highly enough”
If you are suffering from a gap in financial leadership in your business, an Interim CFO / FD could be the perfect solution. Arranging Interim FD services is simple and cost effective. Book a discovery call with one of our experts to find out more.