Articles > Workouts--Our 90 Day Plan


11 Mar 2009

We will work collaboratively with the bank, the Borrower, major customers and major suppliers to develop a detailed 90 Day Action Plan with timelines, milestones, accountabilities and detailed financial forecasts that will measurably:  

  • Reduce Bank debt
  • Increase profitable sales
  • Maintain or increase margins
  • Decrease inventory levels
  • Reduce A/R
  • Generate cash

 We develop a realistic Plan of Action that will show how debt will be quickly reduced. Measures consist of: improved operational efficiency, reduction of inventory, increased sales and, if necessary, elimination of redundant operations, non-essential staff and other assets, including all corporate toys and perks.

Our Problem Loan Discovery Process:

1. First, we meet with the Bank to develop a detailed understanding of their issues and concerns with the Borrower. We’ll also inquire about efforts to refer the Borrower to an alternative lender, as in most cases, this may be the quickest solution.

2. Next, we meet with the Borrower to explore the root cause of the problems and to determine if a solution can be developed to fully address and mitigate the Bank’s concerns.

3. We’ll assess the leadership team to determine if they have the skillset and the backbone to make the tough decisions necessary to ensure immediate improvements. Determine if anyone on the management team has the credibility and skill to lead the execution of the 90 Day Action Plan.

4. Make recommendations for the removal of those individuals that are an impediment to a timely turnaround, including actual removal and replacement of the failure team, if necessary, to restore the Bank’s confidence.

Developing a 90 Day Loan Repayment Plan:

1. We’ll quickly develop a detailed 90 Day Action Plan that will identify, weed-out and eliminate all non-performing and redundant business units, products, departments, projects, programs and people. The Plan will result in measurable improvements and debt reduction on a written, scheduled basis.

2. Then we’ll restore credibility with the Bank by taking swift, decisive action to pay down the debt and keep the Bank involved every step of the way.

3. We create a sense of urgency and quickly build momentum by acting as the catalyst to remove all obstacles toward recovery. We’ll keep the management team consistently focused on the key business levers that will result in the quickest improvements to cash flow and debt reduction.

4. We’ll create a debt reduction plan that demonstrates the Borrower’s ability stay within their borrowing base. We’ll work to rebuild the Bank’s confidence through: a) honest and constant communication; b) full and timely disclosure of financial results and any significant developments; and c) rapid debt reduction according to the agreed repayment schedule.

5. We work to improve productivity at all levels within the company, beginning with establishing prompt financial reporting to the Bank; daily if necessary.

6. We meet with the Bank at regular intervals to review the progress at meeting our defined objectives according to the written milestones and deliverables in the 90 Day Action Plan.

7. We pay particular attention to the sources and timing of cash flow from A/R to ensure that there is sufficient cash to make weekly payrolls, reduce the Bank debt according to schedule and meet continuing operating cash needs while paying trade creditors.

8. We’ll initiate meetings with key strategic suppliers to negotiate extended payment terms and we’ll develop an accounts payable triage system for all other non-vital suppliers.

9. We dissect the inventory situation to determine how many days supply are on hand, what’s moving, what’s not moving, what can be returned to suppliers and what can be sold immediately to free-up cash.

10. We review all personnel costs to determine where and how cuts can be made without a detrimental impact to the core business.
 

  • Reduce Bank debt
  • Increase profitable sales
  • Maintain or increase margins
  • Decrease inventory levels
  • Reduce A/R
  • Generate cash

Michael A. Evans

High-performance Profitability Enhancement and Cost Reduction Specialists

Copyright, Evans & Associates 2015