How to stay in business with little hard cash

In May 2000, Tony dela Cruz was among those plucked out of his job as vice-president for finance of Bayan Telecommunications, Inc. to set up Customer Contact Center, Inc., a new economy initiative of common shareholder, Benpres Holdings Corp.

As chief financial officer of the start-up call center operation, dela Cruz had his hands full– first preparing the business case and details of the incorporation, then securing licenses and registration with various government agencies including the Philippine Economic Zone Authority , and finally, establishing all financial system and procedures.

"It was a challenge that my work involved not only finance but also the design and construction of the current call center facility as well as procuring all the necessary equipment and facilities to operate our call center," said dela Cruz.

C-Cubed was spun off from the customer service department of BayanTel and was initially tasked to handle contact center requirements of both BayanTel and SKYCable. It now services customers outside the Lopez Group, including North American companies.

Severely tested

As a wholly owned subsidiary of Benpres, which plunked in P100 million to start the business, C-Cubed was severely tested when its parent company faced its own financial difficulties. Benpres is currently in the middle of talks for restructuring over $500 million in debt.

"We had a hard time securing credit from banks. As Benpres could not provide additional capital to run the business, it was a great challenge to raise money through alternative sources to fund the initial capital expenditure requirements as well as the continuing expansion of the business," he said.

Given the current status of its parent company, raising funds continues to entail a lot of negotiation and establishing good relationships with vendors. Financial institutions no longer want to extend credit to Benpres subsidiaries, thus, the only recourse to fund expansion is through suppliers’ credit.

"Being in a ramp up mode, capital expenditures and working capital is a big issue compared to a company in a stable state. Getting the credit for the first time from a vendor is easy but maintaining the same and getting another to expand operations is a challenge. With limited resources and a wide array of requirements, we ensure that we do not incur defaults and continue to maintain our credit standing with the vendors at least. In so doing, we are able to get repeat orders from suppliers without prejudice to our credit lines," he said.

Tight controls

Good funds management and tight financial control are musts in C-Cubed’s situation. "We can only rely on our revenues to sustain operations. Control of expenses through tight capital budgeting and expense monitoring has enabled C-Cubed to survive in spite of limited funds. Also, with the tight controls set, management and staff have imbibed a culture of prudent expenditure management."

Fortunately, C-Cubed has shown great promise and has been out of the red since the last quarter of 2002. "This has enabled us to secure credit and better terms from our vendors."

Armed with an accounting degree, dela Cruz felt finance was the "natural way to go" and has been in the field of finance all his working life in different companies in a senior or executive level. He was handling credit and collection and integrated billing for BayanTel just before he moved to C-Cubed.

Asked for advice for those aspiring to make it in the field of finance, dela Cruz said, "Basic to success is knowing the fundamentals of your function, and being able to manage and motivate the people around you. The greater factor for success, I believe, however, is integrity. Being in finance, there should be complete trust by the stakeholders in the guy handling the money."

Currently, this CFO is in the thick of negotiations with prospective investors. As part of Benpres’ balance sheet management plan unveiled a year ago, C-Cubed is among non-core businesses eyed for divestment.

"Getting new investors is imperative for C-Cubed. We hope a new investor will resolve the current tight credit situation this company is experiencing as a consequence of its parent company’s debt restructuring process."