Publishing house (family company): improving the financial control

Problem: A major magazine publishing house, a family firm with quite a number of informal ‘lines’ still, worked with various contract partners, including advertising agencies. These are usually contractual relationships of long standing. Many of these contract partners depend on the publisher. We were called in to provide assistance for the termination of such a relationship because too high a debtor position had been run up at the supplier concerned.

Solution: After closing the deal, whereby the relationship was terminated without additional loss for the publisher, we put in writing our observations in this case and in a number of other cases that we handled for this publisher, and after consultation with the publisher’s company lawyers, we presented them to management.  The gist of these observations was that the publisher had (far too) long gone along with its suppliers and had intervened (too) late, whereby the financial disadvantage was so great, that the publisher changed behaviour apace with the unwinding of the relations, guided more by the heart than the head.

Result:  The problem has been solved. In the slip stream, we noted that finance and legal had a place at the end of the commercial chain. The advice given was that the publishing house had to concentrate on financial control mechanisms and make better arrangements (where financial and legal should be involved earlier in the chain). The advice is being followed. The specific nature of family firms often requires a broad approach, that usually goes much further than purely legal advice.