Case scenario-New Fire Ltd

New Fire Ltd designs and project-manages furnace and large boiler refurbishments. The company employs 71 people full time and was founded in 1967 by John Gilford. It has sold itself on two main claims: Its ‘cradle to grave’ service and its skill base. Design is seen by the current directors as the real value-added service. All employees are currently employed on a full-time basis. All wages are paid on a basic plus overtime basis. The direct wages of the business include designers, refurbishment engineers and project managers. The indirect wages include the rest of the management team and the administrative staff. There are currently 71 employees.

Commercial issues

The last financial year has been a challenge. The clients have less money to spend but the work still needs to be done. Because many clients have been with the business for years the directors have allowed them considerable discounts to help them through this difficult period. It’s hoped that the clients will respond in kind when the economy improves. The business experiences extreme seasonal fluctuations. The major refurbishments take place in the summer months when factories have traditionally had their holidays. Credit control has also been an issue. It’s not common practice to receive payment until the job is finished and the industry is not known for prompt payment. Payment terms are 30 days from the approval date of the project. This creates an unknown factor, as projects are often completed weeks before they’ve been given formal approval.