The Challenge
Due to the death of a co-partner, the client was now responsible for all areas of the business and recognized that he needed a greater understanding of cashflow and key performance indicators. The accounting and cash management systems were antiquated, inadequate and tribal.
The business included a manufacturing component, and a seasonal application and installation project component, and due to requirements of selling to FAA funded projects required an annual audit. Books were not closed in a timely manner making it challenging to prepare job costs and provide information required for the audit.
With rapid growth it was unclear if the existing line-of-credit would support the highly seasonal installation projects.
The Solution
Initially, FocusCFO was on-site one day per week and conducted the following:
- Analyzed, confirmed and revised actual costs of product and installation.
- Completely revamped the estimating and quoting system.
- Developed a reliable project accounting and costing system so that the Client knew profit as a project proceeded.
- Created systems to allow for effective budget vs. actual project management.
- Created detailed revenue-cost matching model.
- Found, facilitated hiring of and guided work of P/T accounting resource.
- Systematized repeatable business processes.
The Outcome
- With greater command of financials, the client was able to provide information to bank to justify a 100% increase in line of credit.
- With improved cash management models, the company navigated all Covid-19 hurdles and took advantage of PPP 1 and 2 loans, and Employee Retention Tax Credit.
- Books were closed in a timely manner, allowing CPA firm to conduct annual audits.
Improved project management systems provided for project-level tracking of costs and profitability. - With these increased business processes in place, FocusCFO was able to reduce on-site CFO needs by 50%.
- Most importantly, owner and employees can have improved work/life balance.
By the Numbers
- Increased line-of-credit by 100%
- Monthly closing time decreased from 6 weeks to 8 days
- Project costing now on demand
- Project vs Budget available within 2 weeks of project completion
