Judgement under pressure

About three months after I joined as CFO of an engineering contractor in Sydney, our largest customer, about a quarter of our revenue, went into administration. They owed us A$38 million, and at the same time we were close to breaching a covenant on our bank facility. I hadn't caused either problem, but I owned both.

The first thing I did was establish what we actually knew. I built a thirteen-week cash flow, updated daily for the first month, so we knew exactly how much headroom we had. It turned out to be about six weeks.

Then I split it into three problems: liquidity, the bank and the debt we were owed. On liquidity, we stopped all non-essential capital spending, brought forward billing on two projects and agreed longer terms with our three biggest suppliers. On the bank, I went to them before the covenant test, not after, with the cash flow and a plan, and we agreed a waiver and a temporary reset. On the debt, we lodged our claim early with the administrators and put credit insurance across the rest of the customer book so it couldn't happen again.

We came through without raising new equity, and recovered about 40 cents in the dollar in the end. The one thing I'd emphasise is going to the bank early. That's what bought us time.

The hardest for me are decisions where the business case is clear but the cost falls on people who've done nothing wrong. I'm Managing Director of an auto components manufacturer in Chennai, and the most difficult decision I've made was closing one of our three plants in 2023.

The plant was 30 years old and running at about 55 per cent capacity after we lost a major export contract. The numbers said close it. But there were 420 people there, many with twenty years' service, and it was the main employer in that town.

So I made sure I wasn't deciding on the numbers alone. I spent three months testing every alternative: new customers, moving work across from the other plants, selling it as a going concern. None of them worked. I talked it through with our chairman and two plant managers I trusted. Then I made the decision and took responsibility for it personally. I announced it at the plant myself rather than leaving it to HR.

We offered transfers to everyone, and about 150 people took them. The rest got a settlement well above the legal minimum, plus support finding new jobs.

I'd make the same decision again. But I think it should feel difficult. If it doesn't, you're probably not paying attention.

I get calmer and more structured, and the best example is from last year. I'm Finance Director of a listed agricultural business in Auckland, and two weeks before our year-end we were hit by a ransomware attack. Our finance system was down, we couldn't invoice, our audit was about to start and the market already knew our results date.

The first thing I did was split the problem. One team, with IT and an outside specialist, on getting the systems back. A second, smaller team on keeping cash moving: we invoiced our top 40 customers by hand from bank records and contracts. And I handled the auditors and the board myself, so nobody else had to.

I held a fifteen-minute stand-up at eight every morning, and that was the only meeting. Everything else was by exception. I also sent people home. A tired team makes mistakes, and in a reconciliation exercise like that, mistakes are expensive.

We had the systems back in nine days and published our results one week later than planned, with the market told in advance. Clean audit opinion.

More generally, I keep pressure manageable by sleeping properly and protecting one evening a week whatever happens. That's not a luxury. It's how I make good decisions in weeks like that one.

The one I'd use is from about two years ago. I'm Head of Private Markets at a public pension plan in Chicago, about US$70 billion in total, and our CEO wanted to increase our private credit allocation from 6 to 12 per cent over two years. Private credit was very popular at the time, and the board liked the yield.

I agreed with the direction but not the speed. My view was that we'd end up putting too much money to work too quickly, in a crowded market near the top of the cycle, with managers we hadn't properly tested.

I put my view in writing to the CEO first, with an analysis of how much we'd need to commit each quarter and how much of it would go to managers we didn't know. Then I asked for time at the investment committee to present it as an alternative, not as opposition. I proposed 10 per cent over three years instead.

The committee settled on a compromise: 10 per cent over two and a half years. The CEO and I had a frank conversation afterwards, and he said he appreciated that I'd raised it with him before the committee rather than in it.

Once the decision was made, I backed it fully and built the programme. It's tracking ahead of its benchmark so far.

The hardest one was about eighteen months ago. I'm COO of a port logistics business in Accra, and we were building a new container yard, a US$60 million project and the centrepiece of our growth plan. About halfway through, our site engineers told me the ground conditions were much worse than the survey had shown. We needed extra piling, which meant about US$11 million more and a seven-month delay.

The next board meeting was five weeks away. I didn't wait. I called the chair that week, gave him the headline and asked for an extraordinary meeting.

At that meeting I gave them the facts first, with no softening, then three options: go ahead with the extra piling, redesign the yard to a smaller footprint, or pause. I recommended the first, with a revised timeline and a funding plan that used an existing facility rather than new equity.

I also told them where we'd gone wrong. We'd accepted the original survey without getting a second opinion, and that was on my team. We changed that policy the same month.

They approved the recommendation. We finished the yard eight months late, and it's now ahead of its volume targets. The chair told me afterwards that hearing it early made the decision easy.