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Turnaround Situation
Saving the business from foreclosure and monetary savings of over $250,000.
Situation:
Local bank called in to determine financial status of company. Saw several years of negative cash flow, high loss on Income Statement, late on most payments, owner taking little payroll and mostly distributions, IRS audit waiting to happen, over 1,000 NFS charges in one year, and virtually no accounting system. Bank was ready to call all loans which would result in business closure and bankruptcy, as well as loss of personal pledged assets such as home and vehicles.
Action:
Stepped in to ascertain the true financial situation and the viability of paying current obligations. First priority was to begin an accurate and ongoing accounting of business. Established A/P and A/R system to know what needs to be paid or collected. Provided accountability for all financial decisions, and direct contact with banking institution regarding all banking matters such as line of credit advances.
Results:
Named interim CFO. Restructured overhead and operational expenses, reduced over 25%. Increased profit margins by 15 to 25%. Stopped 99% of NSF charges by actively managing cash position, resulting in a direct savings of $30,000. Over a six month period of time, revived the banking relationship and renegotiated a more favorable term financing package. Within one year, the company turned an $80,000 profit, a turnaround of $150,000 from prior year results. Owners took salary and distributions of $100,000. Aided in the raising of capital for new business venture.
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