Situation

Six months prior, client had replaced their long-time Controller with a 26-year-old CPA from a public accounting firm that had no experience working inside a business. The CPA had been in the tax department and never managed a set of books. The company’s financials had consolidated revenue and expense accounts and was growing at a very rapid pace. Leadership had no idea if it was making money and where. The President wanted help delegating responsibility, positioning the company to scale and understanding what an eventual exit might look like.

Approach

We knew the initial step was to redesign the chart of accounts to provide clarity in terms of which of the company’s four business units were profitable and which needed attention. The next step was to train up the new Controller and help him understand the “Why” behind his daily activities and what the numbers meant. We quickly identified we needed to add capacity to his team, so we assisted in creating a job description, interviewing and hiring an AR/AP specialist.

Outcomes and Highlights in Initial Twelve Months

• Business Unit Financials down to Gross Margin within 90 days of starting work

• Showed leadership what their monthly overhead was each month … amount of Gross Profit they needed to generate each month to turn a profit (and how to do it)

• Hired team member and trained Accounting & Finance Team

• Established KPIs for the company (and each business unit) that included both Leading Indicators & Benchmarks

• Streamlined AR/Collection process and established ACH payment capabilities for recurring billing customers

• Worked with leadership to determine which past-due accounts needed to be turned over to collection agency. The company had past-due accounts dating back 3+ years. Recovered over $75,000 in first 6 months.

• Worked with legal counsel to revise contracts for each line of business to better protect the company from potential litigation and close other gaps

• Designed variable compensation package for key managers to ensure all interests were aligned

• Worked with insurance advisor to offer compliant health care plan to employees

• Worked with employment attorney to restructure pay rates to ensure compliance

• Built a budget (first ever) for both the retail and wholesale company

• Worked with IT support to take contract execution digital

Next Steps

In year two, we have five main focuses:

• New banking relationship to better support growth

• New operating platform to manage all aspects of daily operations, including automating KPI tracking and creating daily task lists for each team member

• New accounting software (desktop to cloud) that integrates with operating platform

• Job costing for construction business unit

• Look for strategic acquisition opportunities