Digital Marketing Company Hit By Loss Of Top Salesperson

The Challenge

A Glasgow-based digital marketing company, specialising in website design, hosting, Search Engine Optimisation and Pay Per Click, faced financial troubles after key events. The company’s problems began when it lost a key salesperson and, simultaneously, was forced to change its trading terms to comply with Google’s updated policies. This resulted in a drop in search rankings and website traffic, which in turn hurt cashflow. The situation was compounded by a significant fine from Google for a breach of trading terms. While the directors focused on solving the technical issues and restoring their rankings, they took their eyes off new business development and sales. The company’s financial state worsened until it reached a critical point in 2015 when it lost its biggest client, leading to a dramatic loss of revenue. To add the status of creditors; it owed HMRC £1.8million, and other creditors £4k. Directors had also given personal guarantees to the bank.

The Solution

The directors contacted RMT KSA, who were appointed to assist with a Company Voluntary Arrangement (CVA). RMT KSA recognised that the company was viable but needed a structured way to deal with its mounting debt and cash flow problems. New internal processes were introduced to improve credit control and prevent future bad debts. The technical issues with Google had been successfully resolved, so the CVA could be based on a plan for a stable, forward-looking business.

The Results

The CVA was a success. The CVA which proposed a dividend of 89p in the pound to be repaid over five years, demonstrating the company’s commitment to its creditors and its underlying viability, was approved. With the CVA in place, the company could focus on its core business, having addressed its technical issues and secured a path forward to profitability.