Case Studies - Fractional CFO

Grocery Business Needs Help to Improving Accounting

A $5 million grocery and catering business with multiple permanent and seasonal locations was undergoing severe cash flow problems.

Challenges:

  • Management was made up of four 2nd generation families with different expectations for the business.
  • Financial Statements were incomplete and inaccurate.
  • The company lacked a credible cash flow projection.
  • Bank reconciliations had not been completed for over a year.
  • Reporting and payment of certain taxes were late or incomplete.
  • The landlord at one location threatened termination of the lease due to non-payment of rent.
  • Outside accountant was not receiving the financial information needed to prepare income tax returns.
  • Profitability by location unknown since costs were not being allocated.
  • There was a lack of internal control over cash receipts.

Solution:  

  • A Part-time Lauber Business Partner was engaged. A priority list was developed to address the most critical issues.
  • Utilizing Excel, developed a method for bank reconciliations taking into consideration multiple accounts with multiple credit card processors. Trained the bookkeeper to use this process.
  • Developed a cash flow projection to provide reliable forward looking information.
  • Instituted a weekly process for reviewing vendor obligations and selecting those to be paid.
  • Began to communicate financial results to all family members in a more understandable format.
  • Developed method for identifying costs by location.
  • Assisted in decision to close an unprofitable location.
  • Negotiated with Landlord for favorable lease modification at profitable location.
  • Offered guidance for personnel practices and procedures.
  • Revised month-end procedures to improve accuracy and timeliness.
  • Developed cash control procedures and methods for recording and balancing cash receipts.
  • Formalized monthly physical inventory procedures to facilitate timely and accurate reporting of cost of sales.

What this meant to company:

  • A combination of the above changes gave management control over the critical cash resource.
  • The company experienced improved profitability.
  • Accurate financial statements helped to move all stakeholders to a better understanding of the financial realities of the business.
  • Better information and improved cash flow gave the company the ability to meet vendor and regulatory requirements on a timely basis.
  • Armed with better information, the management team gained confidence in making financial decisions.

The value of a Part-time Lauber Business Partner:

  • Trusted adviser to owners.
  • Improved relationship and trust with lenders and vendors.
  • Financial management concepts integrated into operations.
  • Ability of owner to sleep at night knowing that obligations were being met.
  • Mentor for the bookkeeper as to accounting questions and improved efficiencies.