Yorkshire Small Transport Business Growing Too Rapidly

The Challenge

A two-year-old Yorkshire transport company had grown rapidly to £750,000 in sales but was now facing financial distress. Despite a profitable first year, the business was losing a significant amount of money in its second year. The core problem was a complete lack of management accounting, which led the board to misinterpret its financial situation. They had won new contracts, but without proper cost analysis, they had “guessed” the costs, and each delivery was actually losing money. This unsustainable business model, combined with no real plan for the future, put the company at risk.

The Solution

The company engaged RMT KSA, who used a Company Voluntary Arrangement (CVA) to reorganise the company’s debts, which were primarily PAYE and VAT. The CVA served as a restructuring tool, allowing RMT KSA to provide the board with crucial assistance in cost control, management accounting, and marketing. There was also help given on renegotiation of the companies’ contracts to a more profitable level, removing underperforming drivers, reorganising vehicle finance, and relocating to more suitable premises.

The Results

The CVA successfully restructured the company’s debts and operations. The business is now growing in a controlled manner, with new monthly accounts and board meetings that provide clear financial oversight. The company is now more profitable than its modest CVA forecasts. A marketing plan is in place to diversify its customer base, reducing its reliance on a single main customer. The CVA not only saved the business but also instilled the necessary professional management and financial controls for its long-term success.