Borrow a lot of money, spend a lot of money, make… not enough money. Bankruptcy may have enabled InPhonic, the USA’s biggest web-based seller of wireless phones and services, to restructure and sell itself, but did anyone learn a lesson about why a business with booming revenues also suffered from crippling losses? There were no clues in the press release announcing court approval for the sale of InPhonic to Versa Capital Management. Take a look at this great article, which places the blame squarely on inadequate financial controls. A telecoms business that has great salesmen, unhappy customers and financial statements that cannot be trusted… does that sound familiar? Of course, there is ultimately only one solution to this kind of madness, which is that investors place as much emphasis on financial discipline as they do on headline returns. It is their money after all.
InPhonic’s Inadequate Controls
