A medium-sized company develops, designs and assembles machines for the automotive industry and other sectors. Thanks to its unique technological features, the company had achieved strong growth over the years. However, the steadily increasing number of orders and the ever-increasing scope of customer projects also led to problems. The necessary professionalization of structures and processes could not be achieved to the same extent. In addition, the structural change in the automotive industry caused the company problems. The combination of home-grown difficulties and industry challenges ultimately put the company in a situation that threatened its very existence.
Customer projects budget and deadline-critical - new inquiries canceled
All ongoing customer projects recorded deadline and budget overruns as well as serious quality defects: delivered machines were unable to deliver the agreed quantities or were not ready for production on the promised date. The resulting complaints and additional claims led to significantly higher costs in the projects. Customers reserved the right to make payments on account or did not pay at all for the time being. In addition, newly requested projects were canceled or postponed by dissatisfied customers and/or due to the automotive industry's reluctance to make new investments.
Significant shortfall in target figures - liquidity increasingly strained
The order cancellations and the associated significant correction to sales planning for the current and upcoming financial year made it difficult to achieve a positive outlook. The payment defaults in current projects and the disproportionately high increase in cost structures during the growth phase significantly exacerbated the liquidity situation. The (still) existing cash reserves prevented worse from happening at this time.
Intensive crisis management - new cost and organizational structure established
In the crisis management of the ongoing projects, the interim manager did everything in his power to find compromise solutions with the client to the satisfaction of both parties. He was also heavily involved in project management.
The interim CRO's prioritized tasks also included
- Following up on and pushing customer enquiries
- Re-planning sales and deriving necessary adjustments to cost structures in upside and base cases
- Short-time working, Reducing overtime and vacations as well as adjusting the organizational and personnel structure to upside depending on the base case outlook
- Cost-cutting of material costs and investment freeze until further notice
- Regular cash management at short intervals
The interim manager closely guided the teams involved in the implementation and also provided operational support. He paid great attention to ensuring that the innovations and digitalization necessary for the future continued to be pursued despite all the cost-cutting efforts.
Liquidity and refinancing ensured - turnaround with follow-up orders
The day-to-day business of the interim manager, however, was dominated by ensuring liquidity. This primarily involved actively following up on outstanding receivables (cash-in) or extending payment terms to up to 180 days (cash-out) in consultation with creditors.
The interim manager also focused on suspending the repayment of long-term liabilities and debt rescheduling.
The interim manager reduced orders for materials and semi-finished products to what was necessary for ongoing customer projects. Maintaining or even building up stocks of B and C parts was to be avoided at all costs.
At the end of the mandate, the interim manager had successfully managed the turnaround. The company won back follow-up orders. The secured liquidity and the adjusted cost structure as well as the ongoing innovations form the basis for a positive continuation of the company.
