How CFO Evolve helped an Australian Retailer with a loan for cash flow and business growth
Industry and Background
Our client – a prominent player in the Australian online retail space, had focussed on sales and marketing initiatives to build top-line revenue. Rapid business growth ensued as being recognised by AFR Fast 100.
However, growth has a side-effect of a substantial tightening of cash flow. A seasonal low-point at the end of the year, substantially increased inventories, tax liabilities due and payable and the need to pay increased salaries created a perfect storm of cash flow required.
It was estimated that $1 million in working capital/cash flow was required to enable this client to trade out of their cash flow challenge. However, approaches to traditional lenders were declined.
Understanding that growing businesses cannot afford a full-time corporate Chief Financial Officer (CFO), CFO Evolve was able to provide a part-time CFO two days per week. This part-time CFO was delivering all of the services, advice and guidance of a full time CFO at a fraction of the cost.
Within a month CFO Evolve had assisted with their cash flow shortage and their continued business growth by:
1. Developed and implemented a three-way financial model (profit and loss, balance sheet, cash flow) to enable the working capital/cash flow injection to be modelled against loan servicing requirements.
2. Developed and implemented monthly management accounts to aid executive management of the business.
3. Worked with the cash flow loan funders and finance provider to ensure the information provided was both timely and accurate.
Within 3 months the loan was completed.
CFO Evolve continued to work with this client to develop and achieve business financial goals, leading to the full repayment of the cash flow loan within 13 months.
Results
After a 16 month engagement, CFO Evolve had assisted in gaining a business loan, ensure all loan covenants were fulfilled, the loan was serviced in full, the client had no loans outstanding, the tax debt was paid, creditors reduced by half and inventories by a quarter. Significantly, new processes, procedures and resources were put in place to ensure the client could grow to their next stage of evolution. Most of all, their cash flow problem was resolved.
CFO Evolve provides exceptional part-time CFOs, passionately building great businesses through financial and strategic insights. Contact us if you think that we can assist with your cash flow management.
CFO Evolve
Exceptional part-time CFOs