A Coventry company is this month breathing a sigh of relief having survived "two bombshells" in a year that almost brought the firm to its knees.
Now WJ Clarke, a longestablished contracting company specialising in foundations and groundworks, is using the lesson to warn other businesses of how a profitable company can avoid problems.
"We had worked well for many years with one major house builder and, in short, had too many eggs in one basket. That company was taken over and all their new work went elsewhere, so we were left high and dry," said managing director Chris Clarke.
The company's immediate response was to take on work for a new client but this quickly ran into problems when the firm kept changing the specification and refused to pay for the extra work involved.
"Suddenly I had a huge hole in my cashflow and a gathering crowd of unsympathetic creditors and banks," said Mr Clarke. WJ Clarke had been using Haines Watts, which specialises in owner managed businesses, for compliance accounting and turned to corporate finance advisor Alan Gardner at the Birmingham office.
He and his team completed a rapid assessment of the situation and options and put together a rescue strategy.
The first, painful, task was to cut costs with several redundancies. The next hurdle was to raise working capital to buy time with the creditors while the order books and cashflow were re-established. While it was difficult to recover disputed debts, past prudence meant there were a number of significant assets that could be put to good use.
Haines Watts' asset finance expert Brian Duffy arranged for more than £160,000 to be raised on existing assets.