Challenge
When we engaged with this mid-sized distribution company, the business was facing a precarious financial situation. Their lender had raised serious concerns, requiring capital contributions from ownership and closely monitoring their line of credit, which was extended in six-month increments. The risk of a forced sale loomed large.
Internally, the company struggled with delayed and inaccurate financial reporting, which left leadership without a clear picture of their financial health. Rising material and freight costs were eroding profitability, and resistance to change within the finance team further complicated the situation. At the outset, there was significant uncertainty about whether the company could stabilize, let alone recover.
Solution
We approached the engagement with urgency, focusing on immediate stabilization and building a foundation for long-term financial health:
1. Immediate Stabilization
- Addressed critical tax preparation issues to meet lender requirements and provide clarity to leadership.
- Streamlined the month-end close process, reducing it from 10–15 days to just 2–3 days, enabling timely and accurate reporting.
- Built trust with ownership through early wins, establishing credibility and momentum.
2. Strategic Financial Initiatives
- Developed key performance indicators (KPIS) and created an annual budget aligned with measurable targets.
- Introduced a KPI dashboard to track targets and results over a rolling 13-month period.
- Held monthly financial review meetings to analyze trends, prioritize actions, and ensure accountability.
3. Cost Optimization
- Initiated a freight RFP process and implemented a competing broker strategy, resulting in significant reductions in freight expenses.
- Recommended hiring a purchasing manager to address rising material costs, leading to ongoing rfp efforts and steady cost reductions.
4. Team Realignment
- Transitioned the controller, who was not in the right role, to another department, enabling the finance team to function more effectively.
- Developed the staff accountant’s skills, empowering her to take on greater responsibilities and refine the month-end close process.
- Reduced overall finance department costs while improving the quality and timeliness of financial reporting.
5. Navigating Hard Conversations
- Facilitated difficult and emotional discussions with ownership to align on priorities and address the risks facing the business.
- Fostered a culture of trust, accountability, and collaboration, breaking through resistance to change.
