The client needed to extend his overdraft facility to fund a shortfall in cashflow over the subsequent six months to cover redundancy payments, re-organisation costs, HMRC payments and allow time for the organisational changes to generate increased fee income.
Moulding the proposition into a bank-friendly format was relatively easy – as they had a very good relationship with their existing bank, and an excellent credit history. The firm had good financial information systems, management accounts on a quarterly basis and close control of cashflow on a day-to-day basis.
However, they could not budget easily – as costs, Income, and bank accounts were managed and controlled separately.
The request to the bank was going to need a robust set of profit & loss budgets and a cashflow forecast.
In the course of preparing the bank proposal, we created a summary spreadsheet which automatically updated budgeted figures as actual performance was achieved each month – and also amend the cashflow forecast.
In this way, the managing partner had all the ‘forward looking’ management information he needed to see at least three months ahead whether there was likely to be any future pressure on cashflow, and be able to take coping action in good time.
The bank had all the information they needed, to assess future financial performance, in one place – and was very happy.
The bank request was agreed (as we fully expected) and, equally importantly, the Managing Partner felt much more in control of the Practice. We gave him the ability to anticipate financial issues well ahead of time, instead of fire-fighting. He uses the spreadsheet as his ‘Business Bible’ and live business plan. He meets up with us bi-monthly to review progress.
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