CFO Options’ Larry Levy has repeatedly helped companies achieve healthier financial outcomes.
Here is a sampling of those experiences:
Upon starting this engagement, Larry quickly realized the company had a low profit margin and untapped opportunities to increase it. He challenged himself and others: can we increase both gross profits and operating cash flow?
Larry did in depth analyses and reviews of the profitability by customer, by service and by region. He also looked at the internal operations for opportunities to increase productivity and reduce costs.
Seeing an opportunity to improve margins by migrating existing customers from low margin products to high margin products and by focusing sales and marketing efforts on the high margin products, Larry went to work with rest of the Executive Team. He created a strategic plan to migrate customers with goals established for each month over a two-year period. He also revamped the sales compensation plan to create a significant reward for selling the high margin services as compared to the low margin services. He led the efforts to re-engineer how some services were delivered and negotiated more favorable deals with underlying suppliers. Further, he found several areas where productivity could be enhanced with better management and improved systems.
A host of positive results were realized as a result of Larry’s actions, including:
- Operating cash flow tripled driven by:
- Saving $1 million per year by implementing the closure of an unproductive territory.
- Increasing employee productivity, which generated a 20% reduction in non-revenue producing roles and a savings of $800,000 per year.
- Expanding the sales staff by 700% using the savings from other initiatives to fund the expansion.
- Increasing the productivity of the sales support department 700%, allowing the team to generate quotes for 7 times as many salespeople.
The company was spending thousands of dollars per month on a CPA firm to perform basic accounting tasks. Larry saw an opportunity – could the company’s accounting needs be more efficiently and less expensively handled by building an internal centralized accounting department?
Further, the company was on the verge of acquiring many operations. This issue, while expensive but manageable for a single operation, was set to overwhelm the company as it grew.
Larry created a shared accounting department to handle payables, general ledger, financial statement preparation, variance reporting and consolidations as well as payroll processing and benefits administration. This work included creating a standard chart of accounts, financial statement formats and processes for getting the necessary information from each of 25 operations (and their 450 employees) to the centralized staff.
With Larry’s help, the company saved $400,000 per year.
A company facing ongoing operational losses was struggling to bring itself to breakeven, or better, and finding the cash to keep itself going. How could this cash poor and unprofitable business turn itself around?
Larry went to work establishing a weekly budget and cash flow forecast to make it clear to the operating manager exactly what it cost to run the operation each week based on various choices made as to marketing, production and distribution. Working closely with operations, he determined what changes to costs of goods sold and general administrative expenses were needed to get to breakeven immediately. Further, he made sure the plan included the ability to grow the company bit by bit. Because of the gap between billing customers and getting payments from them, he also made arrangements to factor the company’s receivables with an eye towards weaning itself off of the expensive lending as soon as possible.
The steps Larry took not only helped the company identify where losses were occurring but also had significant influence on how it would move forward. This became abundantly clear when he:
- Helped the company breakeven on an accrual basis within two weeks.
- Ceased using factored receivables as a source of capital within three months.