An independent school was facing a number of issues, predominantly due to the effects of the economic downturn, but also due to ineffective management and processes.
Situation on Appointment
- A decline in pupil numbers and loss-making.
- Poor financial management.
- No headroom in working capital facilities.
- Asset rich, strong LTV, with no cash reserves.
- Fees paid in advance and poor disbursement collection.
- Staff contracts had notice clauses equivalent to a minimum one year’s pay.
- Board of Trustees reactive and not proactive in financial management.
We undertook an Independent Business Review (IBR) on behalf of the bank, which identified trading difficulties and bank risk, as well as highlighting a staff-to-pupil ratio issue and cash flow pressure points.