Reclaiming Progress: Cashflow in Contracting

The Contract with a Catch

A contract maintenance business had been trading for 20 years.  It had become a family concern – providing a living to two generations.

They were pleased to win a major contract with the government that required one simple change to the way they billed.  They needed to bill for quantities, instead of the “hourly rates” they had used since inception.

This turned out to be a nasty trap, and a miscalculation, coinciding with a major flood, lead to catastrophic pressure on their cashflow forcing them to appoint administrators. 

The End of the Road?

Their bank became hostile – with the client partially at fault, not having fully disclosed critical data.

They engaged an advisor who needed to guide them on how to restructure the business and ensure it emerged cashflow positive.

But they needed to remove the bank and enter into a Deed of Company Arrangement if the business was to be saved.  Liquidation would mean destroying livelihoods and a family legacy along the way.

The Right Money, The Right Way

Clearly, the recent history was going to be a major impediment to raising the capital needed to both pay-out the bank and furnish the working capital needed for the business to trade-out of its predicament.

The advisor introduced this challenge to Hermes who was able to extend a term loan against the property and equipment – all held as security by the bank until that time.  A Hermes debtor finance facility provided the working capital also needed.

The Return to Prosperity

The business was able to successfully enter into a Deed of Company Arrangement, settling with its creditors and repaying the bank.

Outcome

As a result, the directors were able to regain control, keeping both the business and their family homes. With the education that the experience gave them, they were able to make the most of the chance to restore the lifestyle they had previously enjoyed.