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Cashflow Case Study: CNC Technology Ltd – a typical SME precision engineering business

About our client:

CNC Technology Ltd (CNC), established in 2008, provides high quality precision engineering services to diverse markets including automotive, aerospace, energy, oil and gas and nuclear energy. The company specialises in taking initial concepts through the design and development stage and into short run production.

Why did they need Panoptic & Pinnacle Savings expertise?

CNC was initially introduced to Kevin Johnson at Panoptic Ledger Solutions Ltd. Kevin specialises in helping companies identify the root cause of any cashflow problem and source funding solutions as well as providing strategic expertise to enable clients to safely grow their businesses. CNC wanted controlled and safe growth, by avoiding debt and bank borrowing.

During the time Kevin spent with the MD from CNC’s side of the table, it was apparent the company qualified for an R&D Tax Claim and introduced Paul Wallace and the Pinnacle Savings Ltd team to work together to support the claim. This claim was centred around their activities when trialling and developing systems to improve performance, the manufacturing of prototypes and innovative reverse engineering techniques designed to reduce cost and improve quality.

Our combined and unique approach produced results and added value:

Kevin carried out:

  • A full review of the business processes and cashflow model, resulting in a new credit control system and Terms and Conditions of Sale
  • A commercial risk review and credit insurance was introduced
  • An introduction to a new accountant at the request of the MD
  • A comprehensive bank and market review of appropriate finance products. This enabled the MD to decide to fund growth out of company profits rather than taking on debt. A key strategic decision for the MD
  • A local authority grant was sourced to purchase a new CNC machine, with Kevin managing the entire process
  • A full cashflow review with projections and managed all commercial risks which gave the MD confidence to progress with an expansion
  • The R&D activity identification and introduced CNC to Paul Wallace at Pinnacle Savings who, despite the client’s initial scepticism about the scheme, facilitated a highly profitable and successful first R&D Tax Claim

The results:

  • In 6 years, the company doubled its turnover without borrowing money and has a healthy cashflow, enabling them to increase headcount and move to larger premises
  • The MD has significantly improved knowledge of financial, cashflow and commercial terms
  • For only 2 hours management time, CNC received a corporation tax benefit of £23,380 from the R&D tax scheme and will continue to pay reduced corporation tax through subsequent claims.

The client’s response:

I would recommend Kevin at Panoptic to any SME business that needs independent and expert help with cash flow funding options, managing their bank, management support and business consultancy all wrapped up in one service. The revenue from the R&D tax claim, expertly handled by Pinnacle Savings, has given us a welcome additional boost to our funds both now and in the future and further enhanced our business growth

 

Kemwell Fire International Ltd, a specialist manufacturer and supplier of fire protection products and systems

About our client:

Kemwell Fire International Ltd (KFI) is a specialist designer, manufacturer and supplier of innovative fire protection building products and systems. The KFI team provides expert advice to architects and contractors and supplies a specialist range of products in the critical areas of fire protection and fire stopping. KFI was established 6 months before the Grenfell fire disaster in June 2017. The subsequent shifts in building and fire safety regulations presented the company with a superb opportunity to capitalise on their knowledge, products and services.

Why did they need Panoptic & Pinnacle Savings expertise?

Given its rapid growth, KFI needed strategic working capital advice from Kevin Johnson on how to manage and fund their cashflow requirements and understand both the finance products available to them and their features and benefits. As KFI import, manufacture, stock, wholesale, design and install systems their funding requirements cover many options.

Kevin recognised that the company also qualified for an R&D Tax Claim and introduced Paul Wallace and the Pinnacle Savings Ltd team to work together to support the claim. KFI were eligible to make a claim because of the complex technical and installation aspects of their fireboard solutions, particularly with increased compliance and awareness in this sector following the wake of the Grenfell disaster.

Our combined and unique approach produced results and added value as follows:

  • Kevin undertook a complete overview of trade finance, invoice finance, loans, banking, credit insurance and all the other financial products that were applicable to KFI. This saved KFI directors a great deal of time and they were then in a good position to take a strategic route to market, with Kevin’s guidance, and obtain the best finance products deals to suit them.
  • In late 2018, KFI took some large orders in addition to their normal organic growth and needed some additional working capital to fund the raw materials and labour. Driven by a very tight timescale, Kevin sourced two loans very quickly at the best rates available with the lowest level of personal security required by directors.
  • As all the directors were relatively new to running an SME, Kevin attended weekly meetings to support them with pro-active planning and cashflow management. This meant that common finance and cashflow pitfalls, often not recognised by SMEs until too late, were avoided.
  • In 2020 Kevin helped source a CBILS loan, forge a new relationship with their bank, and support them to get a specialist construction finance facility to fund the more complex contractual debts. This resulted in additional cash and revolving credit lines which has facilitated safe growth into different market sectors.
  • Kevin then introduced KFI to Paul Wallace and the team at Pinnacle Savings who successfully supported their first and second claims through the R & D Tax Claim scheme.
  • Kevin continues to support KFI and is currently re-investigating Trade Finance options for the import of raw materials to further aid cashflow and growth

The results:

The company has grown safely from a nil turnover to just under £3m in three years.

Many “finance growing pains” during a rapid expansion of turnover has been avoided.

KFI recovered £51,248 under their first R&D tax claim, and a follow-up claim will provide a further £52,265 tax benefit. This amounts to a total of £103.5K tax benefit for one day’s management time.

The client’s response:

Kevin has a vast knowledge of the whole funding marketplace and products available. When setting up KFI it was a natural step to engage Kevin to help with all aspects of our capital and cashflow funding and to advise and support our growing business. The additional revenue from the R & D tax scheme has helped us to maintain a robust financial position which has been especially important to our survival during the current and uncertain business climate