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.
- 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.
- 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.