Case Studies - Part-time CFO

Small Company Loses A Major Customer

A $4 million dollar manufacturing company lost a significant piece of business.

Challenges:

  • Lacking forward looking financial tools, the company had no visibility on the steps needed to work their way out of the situation.
  • Lender, caught by surprise, was very uncomfortable and let the ownership know they were considering calling the note.
  • The three partners in the business had varying degrees of understanding of the severity of the situation.
  • Costs, including owners comp, far exceeded the available revenue generating significant losses.
  • Payables were stretched and vendors were becoming nervous because of broken promises.
  • For several months, in a misguided effort to put up a positive front, a few days of the next month’s revenue was recorded early. As a result, in the month this was stopped, only 10 days of revenue was available to record.

Solution:

  • A Part-time LauberCFO with the right experience was engaged to get arms around the situation, identify the facts and develop tools to communicate with all stakeholders.
  • An assumption driven financial model including cash forecast was created to form the basis for a work-out plan.
  • The model was used to make the expense cuts necessary to get back to profitability operation.
  • The financial model along with a 13 week cash forecast were used as the basis for a communication plan to keep the external stakeholders informed on the status of the reorganization.
  • The LauberCFO completed a weekly review of the backlog to determine the optimum level of staffing for the following week. Based on this analysis, staffing was determined based on available work.

What this meant to company:

  • The company survived and the lenders, investors and all vendors were paid.
  • Able to deliver on promises, the company slowly regained credibility.
  • With the new financial tools in place, management slowly changed from a reactive to a proactive culture.
  • Regaining confidence in the prospect of a steady paycheck, key employees stuck with the company.
  • The owners maintained their job and investment.

The value of a Part-time LauberCFO:

  • 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.