Making your business life easier

How good are your financial processes?

Does your financial information help you understand how your business is performing?

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Key business issues to think about at the moment

The market is unpredictable so your management approach should reflect that.

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When did you last think about your structure?

Your business structure defines who does what and who decides if there is doubt.

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Making Your Business Life Easier

Although most people measure their business success by how much profit it is making or is expected to make many businesses do not get the advice they need. One statistic that highlights this is that half of all businesses that have average accounting records fail* and the failure rate increase as the accounting quality declines. It is inevitable that all of those businesses are not much fun to own or work in. Average is not good enough your business needs great financial advice.

ElliottBourke & Co is keen to provide you with the great financial advice your business needs.

Xero Certified AdvisorIf you are interested in exploring how we could help you call for a free one hour discussion. Contact us and we can give you an idea of how we can help.

About the Firm

ElliottBourke & Co is a Chartered Accounting practice.
We work with medium size businesses by helping them to do a great job managing growth, succession or distress. You can understand what we would do for you and how much we would charge without any cost simply by calling or emailing Leo Bourke.

Our Work

We expect to provide you advice that is useable and valuable bringing the blend of theory, experience, creativity, pragmatism and nous that your situation requires.

Some examples of our work

Some examples of our work include:

Reducing Cost

Improve systems, processes and decisions

Improving cash flow

Borrowing Money

Business planning, budgeting and forecasting

Project management

Sell or buy a business

Governance

Reducing Cost

Situation

Summary

What we did

Sudden loss of a client

The cost of running the business was in excess of likely sales and so a 25% cost saving was required;

Developed and supported implementation of a process to manage costs down in a manner that resulted in real savings not just relocation or deferral;

Addressing a business loss;

Enterprise had around 200 staff across a number of locations and disciplines

Identified opportunities to reduce cost and established targets and controls to achieve the targets;

Hidden cost

Identified that a charge made by insurers was for considerably more than headline indicated;

Wrote to all clients and encouraged more cost effective purchasing;

Managing new overheadt

A range of options exist for expansion.

Considered the total cost of ownership of the various options and recommended it to client;

Improved systems processes and decision

Situation

Facilitate regular governance level discussions about business performance and key business issues;

Implement financial reporting systems and job management systems for a number of clients of various scale (ElliottBourke & Co spun out a new business from the work it had done in this area).

Develop processes to ensure all income invoiced properly;

Implement an accounts payable process that allowed proper oversight and segregation of duties to satisfy audit requirements;

Consider commercial risk in an agreement;

Consider the merit of purchasing commercial property to facilitate business growth;

Consider purchasing assets and services on vendor finance

Consider appointment of additional staff or termination of existing staff

Identify how to create a paperless office environment

Some of Leo's other experience in this area

Situation

Design an inventory reorder system for a seasonal FMCG carrying ~30,000 SKUs across 30 locations;

Ensured that system support and development was structured in a manner that caused it to be, predictable and effective with up to 6 teams of IT staff engaged at one time;

Advise a business on commercial aspects of agreeing to a project with several $100,000 of potential late delivery charges

Support a process to allow a business manage a £200m risk to help a client achieve a £60m arbitrage.

Assess and advise on shutting down a long standing operation with 20 Staff

Improving Cashflow

Situation

Summary

What we did

Can't meet loan repayments

Business was not achieving targeted performance levels and related profit. Accordingly, forecasts indicated that the business would not meet its funding requirements;

Prepared a plan to allow continued operation. Met with bank to reschedule debt.;

Reduce borrowings

Business required significant working capital.

Identified opportunities to improve trading terms with customers and suppliers reducing cash requirements by around 10%;

Can't pay the wages

Business with 200 staff had used all available funds and was likely to miss payroll;

Negotiated short term funding from the bank;

Some of Leo's other experience in this area

Situation

Summary

What we did

Business prioritising creditor payments each month

The business was struggling to stay within its $4.5m credit limit each month;

Improve the cash cycle and eliminated all funding requirements;

Retailer wanting to reduce borrowings whilst improving turnover and customer experience;

Business had 30 branches with around 30,000 SKUs. Most customers purchased on credit at times with extended payment terms;

Develop strategies to reduce cashflow requirements and support implementation including inventory management processes and procurement rules. For example cross docking distribution and payment on scan;

Borrowing Money

Situation

Summary

What we did

Refinance a family enterprise to remove house, business and founders from debt exposure;

The incumbent bank was reluctant to release existing securities;
The new structure on the face of it increased the banks risk profile and so a premium of interest rates was possible.

Bank changed, funds borrowed at very competitive rates;

Finance to allow acquisition of a new business;

The clients "debt map" was fragmented increasing the risk weightings and exposing the owners to personal risk;
The existing businesses and target business provide services with limited tangible assets to provide security;

Support funding application by:

developing forecasts and financial statements;
Recommending change of bank;
Providing commercial advice;

Borrow to fund establishment of a new capital intensive business in an established industry;

The clients had:

Very limited capital;
A substantial contract from a well-respected supplier;

Support the funding application including preparation of a budget, attending meetings with the bank and providing commercial advice on the loans offered.

Borrow to avoid default

The clients was:

70 years of age;
In arrears on a significant amount of tax;
running a profitable business with good cashflows;
able to access adequate equity.

It was necessary to shop the banks to find a solution

Develop funding application including budget, performance data and statement of affairs.
Attend meetings with various banks.
Advise regarding offers made and other commercial advice.

Client in breach of banking covenants including key ratios and reporting;

Financial structures had been ill disciplined with cost structures that meant existing covenants would not be met for some time;
The business required immediate cash-flow support to meet wages for ~200 staff.

Identify the need for funding and breach of covenants.
Develop a strategy to manage situation for CEO approval.
Lead the negotiation to raise short term facilities with the bank achieving reasonable rates;
Rescheduled core debt with new achievable covenants;
Through the process created a positive commercial relationship with the bank;

Client in breach of banking covenants although very profitable and progressive

The client's finance team had not identified significant breach of bank covenants and so had not communicated or managed the event.
As a result the bank had taken a firmer position than warranted by current or historic business performance;

Meet with bank and discuss their position and support the owner in developing improved finance functions.

Client with the banks "credit" team;

The finance team had all left, with early management results indicating profitability well behind forecast.
The potential to face a call on several million dollars of debt was possible.

Provide credible substance to the finance function of the company, provide commercial advice to the CEO and get financial processes in place.

Some of Leo's other experience in this area

Situation

Summary

What we did

CEO of business operating with $4.5m of debt on call facing probable call from bank;

Poor operating results;
Late reporting;
Key client had stopped payments;
Non-payment of ~80 subcontractors would cause immediate failure of business;

Establish effective banking relationship with bank including rescheduling debt;
Operate business to optimise borrowings.
Achieved no core debt within 2 years;

CFO at AgResearch managing treasury functions including raising ~$10m of debt with an expectation of raising a further ~ $30m.

The Government had demanded AgResearch leverage its balance sheet to release funds to them. That required the company to borrow around $30m.
Ultimately the directors refused as it was not appropriate for the company to be heavily geared.

Establish a process likely to create best support from the banks and position the organisation to achieve effective liquidity management.
Obtain advice outlining the appropriate level of debt for a research organisation to allow the directors to properly consider the level of dividend appropriate.

Governance role of University of Waikato including treasury sub-committee

The treasury sub-committee was in place to represent the council by ensuring proper policies were in place and operating around treasury matters;

Attend meetings and require information that demonstrated the operation was being conducted effectively and with the right risk profile.

Experienced manager with Arthur Andersen insolvency team;

Businesses invariably under control of an insolvency practitioner;
Short term borrowing at insolvency practitioners risk could be raised to allow trading out of a business;

Work with insolvent businesses including investigation of causes of insolvency realisation of assets and dealing with banks and other creditors;

Business Planning, Budgeting & Forecasts

Situation

Summary

What we did

A business is operating in a consolidating industry but with management that has good core skills and with good equipment;

A bold move was required to achieve a return for the owners that is better than a wage;

Support the owners to develop a credible plan and establish a protocol to understand performance against plan.

Finance to allow acquisition of a new business;

Support funding application by:

developing forecasts and financial statements;
Recommending change of bank;
Providing commercial advice;

A business was being acquired by people who are new to self- employment;

A budget was required to provide a sensible baseline for measuring performance and to provide a basis for responding to operational matters as they arose;

Support the owners to develop the budget including challenging underlying assumptions;
Measure performance against budget and recommend corrective action or highlight matters requiring attention;

Facilitate a two day planning meeting for eight senior staff.

A commonly held strategic plan was required to allow the organisation to operate cohesively and to allow effective communication across the numerous stakeholder groups including: staff, management, board, bank and members;

Develop the agenda, co-ordinate pre-work (including team profiling) facilitate the session, consider documentation of session;

Develop budget for a 200 staff business with a divisional structure;

Management historically had little ownership of budget process or result;
Legacy budgeting tools poorly configured;

Develop the budget from ground up and involve the various stakeholders so the discussion was about performance rather than "whose budget" it is.

Self-employed tradesman not satisfied with income being achieved

Current business operations and franchise achieving less than minimum wage.

Developed a business plan that focused on profitable activities, exited a contract that was costing money to complete and stepped away from franchise.
Support business owners to consider actual performance regularly so that commercial decisions were made regularly;

Some of Leo's other experience in this area

Situation

Summary

What we did

Prepared and assessed business cases for the purchase and establishment of businesses, investment of R&D, and capital.

In the various situations it was necessary to gain the right balance between passion, instinct, facts and operational capability.

To create or critique business plans and budget so that a well thought out opportunity was understood and had a good chance of success or early death;

Facilitated a number of planning session for multi-million dollar turnover companies

There are inevitably significant tensions between stakeholders that need to be managed to get to a common expectation that supports the business objectives and maintains engagement by the people who have to deliver the result.

Getting the right issues on the table in a way that allowed proper strategy and proper buy-in;

Develop a national sales plan

Appointed to a sales management role as the GFC hit. The role had two key objectives:

get business;
avoid bad debt;

Co-ordinate the sales effort and sell.

Project management

Situation

Summary

What we did

Sale on the open market;

Good business providing an essential service to their key industry. The owners have no experience buying or selling businesses.

Provided commercial advice including considering the best sales plan, finding a suitable broker, developing and producing key information for potential purchasers.

Client needed to deliver Audited Financial statements;

The finance team had not maintained required standards in previous 12 months;
A new finance team had to be installed;
A new audit team had been appointed;

Project manage the process of achieving proper financial management, appointment of a permanent finance team, and conduct of the audit including delivery of financial statements;

Clients needed to recruit new financial controllers

The businesses were in provincial towns;
Existing processes were unlikely to attract required talent;

Design the role, lead the recruitment process including screening interviewing and recommending an appointment.

Client required a new Standard Operating Procedure (SOP) relevant to most activity across four divisions;

The SOP was for a common step to all business activity. Existing practice varied significantly and jargon had a range of user definitions and stakeholder expectations;

Lead a team of cross divisional experts to develop an SOP that provided a common process and understanding, promulgated the SOP and gained approval;

Investigate cause of poor financial performance of a division and recommend what to do

A division was showing significant financial loss within an industry where profits are usually achieved.
Stakeholders were sceptical that actual financial performance was as claimed;

Provide advice to senior management, board and affected staff regarding process and content to support the project manager.

Establish board reporting package and processes;

Client had decided to formalise governance process and had no real experience.

Establish a board reporting process and package;

Consider financial integrity of $5m turnkey project

Organisation had limited structured project management experience, expectations of detail amongst stakeholders was divergent and expectation of role of project manager was divergent;

Lead development of elements related to the financial processes so that profitability was able to be confidently predicted and measured.

Some of Leo's other experience in this area

Situation

Summary

What we did

Manage representative class action to obtain a Court approved arrangement for distribution of £20m;

Conflicting legal issues between trusts, insolvency and Securities law resulting in 16 classes of claimant each requiring a representative barrister;

Lead project and co-ordinate class action including developing analytical tools to segment claims and model settlement solutions;

Take possession of assets of a business promoting a Ponzi scheme.

Assets concealed and misappropriated;

Lead the team to take over the assets and conduct forensic analysis to identify and recover assets. Provide weekly project reporting to senior civil servants and staff;

Liquidate subsidiary of listed company in Administration. Assets included Japanese stocks, German Joint Venture and US subsidiary;

A range of cross border issues including Court hearing in US

Project managed the various liquidations, identify, repossess (at times with court orders) and sell assets including financial derivatives. Brief Senior staff for insolvency seminal cross border legal case in NY;

Manage litigation against major equipment supplier;

Supplier had provided a turnkey food manufacturing plant too late to allow company to achieve sales in short English season. As a result the company failed. The supplier had instructed some of London's most renowned litigators

Project managed the settlement negotiations with the supplier.

Trustee of a charity running a nationwide on-line promotion

The project required effective tools to allow transactions of the scale required to achieve the required product launch anticipated. Effective risk management needed to be in place to ensure that the promotion did not cause financial stress for the charity and met Department of Internal Affairs regulations.

Provided a governance perspective together with supporting the implementation of robust financial processes.

Revamp a bespoke ERP system bringing in algorithm based processes and analytics;

With Y2k approaching and a core ERP system for the 30 site FMCG business operating on an unsupported operating system a significant IT project needed to be implemented.

Lead the project and represent the business.

Internet shopping was rapidly coming to the foreground and the business needed to develop a response to allow rapid action if a virtual competitor entered the market.

The business operated over 30 FMCG outlets - with a small well known client network. A significant portion of turnover was of commodity products. That part of the business was, therefore, potentially subject to relatively easy competition from vendors if they could by-pass the need for a retail outlet.

Obtained funding, obtained an IT team, designed the product, worked2 with the IT team to create a useful product, make design decisions and communicate with corporate wide stakeholders.

CEO of company contracted to install sensors at 6,000 addresses over 3 years;

The opportunity involved a technically novel solution using a mix of proven and unproven technology.

Manage board expectation and gain approvals as required.
Negotiate the contracts with customer and key suppliers. Provide governance (steering committee) oversight to the project and front line engagement with the client during rollout.

CEO of company contracted to revamp 15,000 outlets at 11,000 sites within 70 days

Complicated logistics with no downtime allowed;

Negotiate contract with customer, appoint project manager and provide governance to project;

Sell or buy a business

Situation

Summary

What we did

Sale on the open market;

Good business providing an essential service to their key industry. The owners have no experience buying or selling businesses.

Provided commercial advice including considering the best sales plan, finding a suitable broker, developing and producing key information for potential purchasers.

Purchase on open market. Horizontal.

Strategic fit was excellent, cultural fit appeared acceptable, however, the operational fit was difficult;

Provided commercial advice at start of client's consideration of the project.

The client had identified a successor to their business and was aiming to transfer the business;

The business had been operated well by a family member. The owners wanted to transfer ownership.

Provided commercial advice.

Helped the executor sell the business and achieve a better than sale price than other advisors indicated would be achieved.

A contractor is offered the opportunity to acquire the business of his key client;

The business was operated with:

weak processes;
poor customer relationship processes;
no discernible strategic intent;
The purchase process had to consider that:
due diligence was constrained;
Future performance was likely to be largely independent of past performance;
Business processes would need to be fully implemented on day 1;
Funding for the purchase and working capital had to be raised.

We provided commercial advice through the process, supported the due diligence of the financial aspects and assisted with training around the necessary tools and business processes required.

The founder of an animal remedy manufacturer decided to sell the business.

The business is very specialised with considerable intellectual property protected by "know-how" only. Managing the sales process well was critical to ensuring the business had value.

The Vendor required periodic advice regarding content, certain commercial issues and process.

A client identified a potential friendly acquisition to bolt onto their existing business.

The vendor:

asserted a desire to sell and be transparent;
failed to deliver agreed due diligence information;
demanded control of the process and content;
limited the information available; and
refused to discuss key terms of transaction;

We supported the client to establish a due diligence process, provided commercial advice as the transaction progressed and ultimately recommended "do not buy".

Some of Leo's other experience in this area

Situation

Summary

What we did

Acquire a manufacturing business to secure supply of a product range;

The current manufacturer had decided to exit; The purchasers analysis indicated:

good profits were available as long as no additional overhead needed;
Manufacturing at a cost effective price required development of tactile skills by the staff "on the tools".

Consider acquisition and approve purchase and ensure business properly established and operated.
Ensure that the results were measured.

Consider acquisition down supply chain to secure geographic region

The vendor was a significant sub-contractor to the company and a dominant player in a strategically important region.
The vendor indicated an intention to exit the market creating a vulnerability to the business.
Negotiations exposed that the vendor was actually seeking to get some cash while continuing to operate (ie without a restraint of trade).

Lead discussions with vendor, make purchase decision.

Sale of 10% of RD1 to NZ post and ASB;

The opportunity was to establish an e-commerce business with:

NZ Posts' logistics expertise and
ASB's reputation and experience with leading edge technology.

The project was high profile in NZ Dairy Group with a high profile public company director leading the negotiations.

Ride shot gun through the various negotiations and discussions

Acquire retail business with multiple locations and brands;

The acquisition was a minor part of a group acquisition.
The business unit included

Nine retail stores;
Four FMCG brands;
Three provincial locations;
Cornerstone tenancy of a mall;

Complete financial due diligence, co-ordinate operational due diligence, negotiate a satisfactory pricing and performance model with head office and support Business Unit Manager. Then to support the post purchase merger process to ensure adequate operation from the new businesses.

Demerger of major European telco and mail business;

The transaction was highly complex with more risks than a Syrian desert walk.

Leo led the liquidation element of the process. The role was to project manage the liquidation of the legacy company in a manner that supported the larger transaction and involved significant risk to the liquidator.

Purchase of CA practice

The business was presented as a straight forward sale by incumbent to allow retirement. However, the picture was heavily skewed by one customer and the vendor did not want to take any risk on transfer.

Leo was purchaser. Transaction did not occur.

Governance

Situation

Structured advisory meetings with a number of clients on a monthly or two monthly basis;

Treasurer for New Zealand Polo Association Inc

Some of Leo's other experience in this area

Situation (all now resigned)

Counsellor of the University of Waikato;
Director of AgVax Developments Ltd;
Director of Technical Farm Solutions Ltd;
CEO Dairy Technology Services Ltd;
CEO of Celentis Ltd;
CFO of Ag Research Ltd, Commercial of Manager Anchor Mart Ltd;
Trustee of Synergy (Cambridge) Trust Board;
Secretary of Morrinsville Polo Club Inc;

People

Leo Bourke Director Read More

Leo is the founder and Director of ElliottBourke & Co. He is a Chartered Accountant with a Certificate of Public Practice.

Leo has a broad range of experience including 5 years in the City of London as a manager for one of the largest Chartered Accounting firms in the world. For the 15 years before setting up ElliottBourke he held senior roles including Chief Executive, General management, Chief Financial Officer and governance roles.

Through those roles he has been involved in businesses that manufacture, retail, research, educate, commercialise, service, promote, export and succeed. A full CV is available on request.

Leo brings his experience and insight to ElliottBourke's customers ensuring that they have access to world class ideas and practical solutions.

Bruce Taylor Governance Read More

Bruce was a Senior Partner with Deloitte one of the Worlds largest Chartered Accounting firms.

Steve Howse Governance Read More

Steve has a background in governance most significantly with Synlait Farms and Synergy (Cambridge) Trust. He has also held senior management roles at LIC and Hill Laboratories.

Alain Russell Governance Read More

Alain owns and operates Blackpepper a digital agency working with a number of businesses around the world.

Leo is the founder and Director of ElliottBourke & Co. He is a Chartered Accountant with a Certificate of Public Practice.

Through those roles he has been involved in businesses that manufacture, retail, research, educate, commercialise, service, promote, export and succeed. A full CV is available on request.

Leo brings his experience and insight to ElliottBourke's customers ensuring that they have access to world class ideas and practical solutions.

Bruce was a Senior Partner with Deloitte one of the Worlds largest Chartered Accounting firms.

Steve has a background in governance most significantly with Synlait Farms and Synergy (Cambridge) Trust. He has also held senior management roles at LIC and Hill Laboratories.

Alain owns and operates Blackpepper a digital agency working with a number of businesses around the world.