Quick Start to Cash Flow Management
Issue: Client is unable to foresee upcoming cash flow needs/issues over the next 2 months.
CFO Advise: We provide an Excel template detailing weekly cash flows over the next 9 weeks that only requires 1 hour to complete by the client. This excel template is integrated with the general ledger (Quickbooks) and requires minimal training. Receipts and disbursments are based on historical and trending patterns for individual customers and vendors, respectively.
Results:Cash flow is better managed and effectively communicated in weekly meetings.
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Integrated Financial Projections
Issue: Client needs an accurate and comprehensive monthly financial statement projection.
CFO Advise: We provide an integrated financial Excel projection that incorporates the income statement, balance sheet and statement of cash flows. Significant financial assumptions are documented and exhibited in supporting detail including projected monthly sales by customer and/or product, contribution margin by customer and/or product, capital expenditures and debt amortization schedules, and roll forward schedules supporting receivables, payables and inventory balances. Projections are supported by bridge analysis, seasonality and growth trends are built into the model, and going forward variance analysis on a monthly and cumulative basis are part of the month-end process.
Results: Management participates in an improved projection process resulting in increased credibility with key stakeholders - owners, banks, employees, customers and vendors.
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Customer & Product Profitability Analysis
Issue: Client is unable to deterimine customer and/or product profitability.
CFO Advise: We provide an Excel analysis that identifies direct and allocated traceable costs and is integrated with the general ledger (Quickbooks). Training includes discussions of contribution margin, incremental costs versus fixed costs, throughput and pricing/estimating.
Result: Management is able to prioritize and evaluate profitability by customer and product. This subsequently leads to improved customer negotiations and product decisions.
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Focused Management Reporting
Issue: Financial statements do not communicate issues, trends and opportunities.
CFO Advise: We work with Management in providing improved analysis and discussion by grouping income statement accounts into meaningful categories that are analyzed based on a common metric and compared with peer and industry benchmarks. We also focus on metrics related to the revenue and costs drivers of the company's economic model.
Result: Management is able to effectively discuss financial results and confidently change course. This subseqently leads to improvements in sales, profitability and cash flow.
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Business Model Assessment
Issue: Client is relying on financial statements that do not reflect the company's true value.
CFO Advise: We analyze the historical financial statements and projections on a quality of earnings basis to generate a pro forma adjusted free cash flow and EBITDA. These values are the basis of estimating the company value (discounted cash flow, EBITDA multiple approach).
Result: Client is able to appraise the company's true fair market value. This subseqently leads to constructive discussions with shareholders, employees and potential buyers.
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Financial Function Assessment
Issue: The financial function is not operating as expected by the owner / senior management.
CFO Advise: We analyze the function from both a process and people perspective, also taking into account key interactions and data exchange with other company functions. This may include "swim lane" analysis between company functions for planning and reporting, the revenue/receipts cycle and the expense/disbursements cyle. This may also include analyis of financial and management controls over processes and balances. We provide and implement recommendations which includes training of new processes and even coaching individuals.
Result: The financial function improves and positively impacts other functions as well. This subsequently leads to greater confidence in the financial function and its responsibilities.
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Transition of Financial Management
Issue: The key financial person is leaving the company with no immediate replacement.
CFO Advise: We function in the lead financial role until a replacement can be hired. Although we will not have the ability to authorize transactions, we can recommend courses of action on both tactical and strategic levels to the owner / senior management. During the hiring process, we can provide hiring documentation for the lead position, participate in employee selection, and provide transition training to the new hire. However, we are not a recruiter.
Result: The Company continues to operate effectively without the key financial person.
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Distressed Business Services
Issue: The company has become financially distressed due to cash flow and/or operations.
CFO Advise: We will provide crisis management intervention including negotiating with the client's financing institution(s), customers, vendors and employees. This process may include development of a rolling 13 week cash flow, financial projections for 1 to 5 years, cost savings initiatives and action plans with company management, and stratigic remedies. We can also assist the company in searching for and negotiating with another financining institution.
Result: The company is able to successfully exit from an out-of-court turnaround process and develop a positive relationship with the previous or new financial institition.
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Continuing Advisory Services
Issue: The client wants or needs continued advisory services from CFO Advise.
CFO Advise: We are happy to provide continuing services to the client on either on a monthly or quarterly retainer or continue on a hourly rate based approach. These services are usually more monitoring in nature such as analysis of monthly or quarterly financial statements prior to discussion by management and/or distribution to the client's financial institution. We can also be asked to work on project-based work that does not require an engagement letter.
Result: The client is using CFO Advise on a project or part-time basis to meet its financial and strategic needs. This usually evolves into a trusted advisor relationship.
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