The Sudden Shift: When "Undocumented Knowledge" Isn’t Enough
Business transition is difficult enough when planned; when it happens due to the sudden passing of a co-partner, the challenge is compounded exponentially.
This was the reality for one of our manufacturing clients. Suddenly responsible for every area of the business, the remaining owner realized that the company’s financial foundation was shaky. The accounting and cash management systems were antiquated, inadequate, and relied heavily on undocumented knowledge—critical data stored in people's heads rather than in clear, shared processes.
The stakes were high. The business had a complex model involving both manufacturing and seasonal installation projects. Because they sold to FAA-funded projects, they were required to undergo strict annual audits.
However, their books weren't being closed in a timely manner (taking up to 6 weeks), making it nearly impossible to prepare job costs or provide the necessary audit data. With rapid growth on the horizon, the owner faced a terrifying question: Would the existing line of credit support the cash-intensive seasonal work, or would the company stall out?
The Solution: Building a Financial Foundation
The owner brought in a FocusCFO Fractional CFO to stabilize the ship. Initially on-site just one day per week, the CFO began the work of translating that siloed information into repeatable, strategic business systems.
The transformation began with a deep dive into the numbers. The CFO:
- Revamped Estimating: Analyzed and revised the actual costs of product and installation to ensure quotes were profitable from day one.
- Implemented Project Costing: Developed a reliable system that allowed the client to see profit as the project proceeded, rather than waiting until the end to see if they made money.
- Standardized Processes: Created a detailed revenue-cost matching model and systematized business processes so the company wasn't reliant on any single person's memory.
- Built the Team: Facilitated the hiring and guidance of a part-time accounting resource to handle the day-to-day transaction volume.
The Outcome: Funding, Efficiency, and Balance
The impact of having a strategic financial partner was immediate and measurable.
With a greater command of their financials, the client was able to present a clear, data-backed case to their bank. The result was a 100% increase in their line of credit, ensuring they could handle their seasonal inventory needs without stress.
Operational efficiency skyrocketed. By systematizing the accounting department, the monthly closing time dropped from a lagging 6 weeks to just 8 days. This speed allowed the CPA firm to conduct annual audits without friction, keeping the company compliant for their FAA contracts.
Perhaps most importantly, the business became resilient. With improved cash management models, the company successfully navigated the economic turbulence of the COVID-19 pandemic, maximizing PPP loans and Employee Retention Tax Credits.
By The Numbers
- 100% Increase in Line of Credit
- 8 Days: New monthly closing time (down from 6 weeks)
- 50% Reduction: As processes improved, the need for the Fractional CFO decreased by half, saving the client money while maintaining results.
- On-Demand: Project costing and budget vs. actuals are now available immediately.
The Real ROI: Peace of Mind
While the financial metrics are impressive, the human element is the true success story. With trusted systems in place and a clear view of the future, the owner and employees achieved a significantly improved work/life balance.
The business is no longer surviving day-to-day; it is scaling with confidence.
