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Cash Flow Difficulties with an Online Retail Company

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The Problem Presented

We were approached by a company’s accountant who explained their client was experiencing severe cash flow difficulties with their online retail company. Unforeseen rapid growth led to problems within the company’s infrastructure specifically with their stock management. The cash flow pressure they were experiencing was coming from HMRC and some of their trade creditors.

Our Approach

An initial meeting was arranged immediately with the company directors in order for us to establish an accurate understanding of the nature of their business and the problems that the company faced. We were able to establish that the company had a core business that retained potential to be profitable in the future but their cash flow problems were a barrier they needed to overcome first. Multiple processes were discussed for this company but it was decided that a Company Voluntary Arrangement (CVA) process would be the best route to take for them and their situation.

How we Helped

Once the CVA was agreed upon we followed the meeting by preparing cash flow forecasts for the company to support the offer of a CVA being put forward to creditors. We also performed a review of the company’s expenditures to see where restructuring could help the company and unfortunately redundancies had to be made and any excess stock was returned to suppliers to reduce the overall liability of the company directors. Finally we convened a creditors meeting which was held 6 weeks after the initial consultation where the creditors approved the CVA proposals.

The Company Now

As a result of the CVA being agreed, the company has been able to continue to trade under the control of the existing directors while continuing to pay monthly contributions into the CVA. The company is in its 3rd year of the CVA and their situation looks promising that they will complete it within the 5 year period.

 

 

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