Case Studies - Fractional CFO

Service Business Challenged By Economic Downturn

An $8 million firm specializing in cleaning commercial property and newly constructed facilities in SE Wisconsin was challenged by the economic downturn.

Challenges:

  • Improve cash flow in an environment where the construction clean-up expenses are seasonal and collections can take 60 to 90 days.
  • Solidify Banking Relationship as the company sought to expand the construction clean up portion of the business.
  • Financial information produced by an outside accounting firm was typically received 45 days after month end.
  • The existing budget process forecasted revenue but did not include expenses or actual vs budget comparisons.
  • Monthly and annual financial statements were not being analyzed or reviewed with management.

Solution:

  • A Part-time Lauber Business Partner was engaged. He began by setting up a 3 month rolling cash forecast including customer collection and vendor payment plans.
  • Met with the current lender and provided a current review of financial information. Moving forward, kept in contact with their Banker to update on current conditions and cash flow needs.
  • Developed a month end timeline for financial reporting that provided for issuing in-house monthly financial statements within 10 days of month end.
  • Set up annual budget plan to be completed during 4th quarter of current year. Monthly financial analysis included actual vs budget comparison for all income and expense items.
  • Reviewed customer accounts for profitability and developed individual plans to increase profitability or eliminate non profitable customers.

What this meant to the company:

  • The cash plan enabled company to reduce term debt while utilizing the LOC as needed.
  • The banking relationship is now a strength of the company, leading the bank to double the line of credit which was essential to fund the growing cleaning business, while reducing the term note.
  • Financial statements are completed 10 days after month end and are now preceded with an estimate prior to month end. This  enables the company to make quicker and better informed business decisions based on actual information.
  • Client has improved profitability and returned to a positive equity position.

The value of a Part-time Lauber Business Partner:

  • Extensive domain expertise in senior financial position.
  • A trusted advisor to owner/CEO on many matters.
  • Looks at business through perspective of maximizing competitiveness and long term enterprise value.
  • Extended tenure with clients helps develop stronger financial and business acumen for client’s leadership team.