Starting situation:
The company traded online and in a few retail stores in hardware and software for a specified customer segment. Growth stagnated following quite a euphoric starting phase. The shareholders lacked in trust in the managing director’s actions and the presented business figures and planning. In addition, rumors of dubious acts and failure of the ERP implementation abounded .
Task:
An interim CFO was appointed to immediately prepare actual and target figures. It was to be discretly clarified as quickly as possible whether the information about dubious acts was true. The finance department was to be rendered professionally and the ERP system made functionally. In conjunction with the CEO, a strategy was to be developed and implemented for reaching the profit zone.
Implementation:
There were indications of fraud in the early phase of the engagement. External support aided the task of narrowing down and documenting the scope of fraud to assert potential claims for damages. Tasks of the departing managing director were assumed by the Interim CFO, at times also in the capacity of managing director. During the analysis phase, it became clear that the gross margins in the market segment fell, key manufacturers amended the price structures, the product range was too complex, and the warehouse stock was out-of-date and overvalued. Additional financing was not available. Therefore, restructuring needed to be implemented via existing funds. In addition to contacting potential investors and partners for the core business, strategy workshops were organized in several phases and the developed goals pursued. Focusing on the core business led to redundancies and the discontinuation of individual company departments. The restructuring was mainly financed by selling warehouse stock excess. Economically viable core areas were transferred to companies from the shareholder group. The Interim CFO essentially took on the following tasks: Head of the Finance Department (3 employees); organizational structuring; planning and implementation of strategy workshops; business planning; appointing and dismissing employees; negotiating with shareholders, service providers, dealers and lessors etc.; inventory evaluation; scope analyses, contracting, compliance and reviewing documentation of fraud etc.
Outcomes:
The company’s business and financial situation could quickly be presented transparently. Necessary transparency surrounding the assumed fraudulent acts was also established. Analysis led to the need for the discontinuation of unprofitable divisions, selling of stock to finance the restructuring and transferring of promising company divisions within the Group. Future losses were, therefore, avoided using existing resources.