United Kingdom

Stressed and Distressed Cash Management 

Cash management is critical for stressed and distressed companies that have limited choices and need to preserve cash to buy time to restructure and/or refinance.

What's on your mind?

May include:

 

  • In breach or about to breach its banking facilities and/or covenants.
  • Under pressure from creditors due to withdrawal of credit lines and/or trade insurance.
  • Overdue Crown debts.
  • Being forced to micro-manage cash/defer payments and making unexpected requests for additional funding from lenders.
  • Account moved to lenders high risk lending teams who are requesting more detailed cash forecasts and related information.

 

Bringing you peace of mind

 

We work with management to understand a business's need for cash and focus on the preservation and generation of cash in order to satisfy this requirement. This includes:

 

  • Conducting an initial review of cash position/requirements.
  • Reviewing and improving cash controls to reflect current position.
  • Developing and implementing a robust forecasting process.
  • Monitoring results and feeding back forecasting and control improvements.
  • Identifying and implementing short term and medium term cash generation and preservation initiatives.
  • Developing appropriate internal and external cash reporting.

 

What's in it for you?

  • Need for new monies is minimised and facility and covenant breaches are potentially avoided.
  • Visibility over funding requirements is improved significantly and robust forecasting processes are implemented.
  • Quick wins delivered which will generate and preserve cash in short term and medium term.
  • Tightened cash controls and improved reporting.
  • Extra time bought to develop and effect a restructuring plan.
  • Cash culture is embedded with skills and processes transferred.

 

Why KPMG?

  • Experienced and dedicated teams with a clear understanding of who the stakeholders are and what their expectations are.
  • Established methodologies based upon a lengthy track record.
  • Global network of member firms.

 

Case study

 

Project Hellidon - Home Improvement Sector
Turnover - £328 million

 

As a result of continuing difficult market conditions caused by five interest rate rises and a drop in consumer confidence, this UK based home improvements manufacturer and direct selling organisation experienced a significant deterioration in financial performance. Following their quarterly trading update, the Group realised that they would breach a lender's covenant test.

We worked closely with the management team to:


 

  • Identify and implement improvements in the Group's short term cash flow forecasting process to enable greater accuracy of forecasting and visibility of cash requirements.
  • Implement cash controls and establish a cross-functional cash committee to instil a cash culture and focus throughout the organisation.
  • Identify and prioritise cash generation initiatives. Implementation of the agreed cash generation initiatives provided the Group with additional headroom and breathing space in order to work up a more radical turnaround plan. The strengthened cash position and cash controls enabled the Group to self-finance its restructuring without any delay. As a result, the Group was able to undertake refinancing negotiations with its lender group concurrently with the rapid implementation of its turnaround plan.