Working Capital Management
Whether you are growing by leaps and bounds or going through a rough patch, cash flow is the lifeblood of your organization.
Sutker Moran can elevate your working capital management capabilities by getting the facts and implementing proven strategies through:
- Developing detailed weekly cash projections
- Monitoring your Days Sales Outstanding for Cash Collections/Accounts Receivable
- Tracking Inventory Turnover for inventory management
- Scrutinizing Days Payable Outstanding for Vendor Management/Accounts Payable
How We've Helped
Case Study: Too Many Products Cause Sizeable Loss
$12 million framed picture manufacturer
Overview
A third-generation, family-owned $12 million framed picture manufacturer was losing money. For many years, these losses were buried within the overvaluation of obsolete inventory. Burdened with a large overhead structure, the company sold “all things to all people.” The excessive product lines and sizeable customer base created inefficiencies within the plant and confusion within the marketplace.
Solution
We analyzed each category within each product line, and each product within each category, and recommended a 40% reduction in SKUs. Selective price increases were implemented for the remaining products. In addition, we scrutinized each non-direct labor position, resulting in over $400,000 of savings from job eliminations. Finally, by narrowing the product base and instituting an inventory reduction program, the space required to support the operations was reduced, allowing for one of the three operating facilities to be sold.
Case Study: Rapid Growth Led to Instability
Overview
A private-equity backed rapidly expanding single-family home rental business needed to establish processes and procedures to fuel its growth. Employees worked remotely in various cities throughout the Midwest and were overworked. Receivables were not being adequately tracked resulting in financial statement misstatements and a lack of confidence in the accuracy of the information provided to the Board of Directors. The financial information provided to the CEO was meaningless.
Solution
The CEO was referred to Sutker Moran by an existing Sutker Moran client who he knew.
Once hired, Sutker Moran successfully converted the Company from cash-basis accounting to the accrual-basis and tackled the receivables issue. Sutker Moran secured collection of over $200 thousand in unreported receivables from the parent Company which were previously undetected. Weekly and monthly controls were established to ensure consistent tracking and collection of receivables.
While the Company was exponentially growing, Sutker Moran established consistent, timely procedures for monthly close and created a financial projection that guided management in hiring and purchasing decisions. New KPIs were established to arm the CEO with the information he needed when presenting to the Board of Directors providing all stakeholders the confidence in the financial information they were seeking. Once the company reached critical mass, the private equity firm brought in a W2 CFO. Sutker Moran helped transition to this individual.
Case Study: Stepping in to Ensure a Successful Transition
$40 million Plastic fabrication company
Overview
The Chief Financial Officer of a $40 million Plastic Fabrication Company resigned in the midst of its sale to a strategic buyer. The accounting staff and the president had limited knowledge of the inner workings of the financial department.
Solution
Sutker Moran was hired and immediately took over the position. Sutker instantly plugged itself into the Company’s cash situation to ensure vendors were being paid timely, especially critical given the impending ownership change. Simultaneously, Sutker began to finalize year-end financials which included developing a monthly close process for the accounting team. Sutker took the lead in navigating the due diligence period with the prospective buyer. Finally, Sutker seamlessly transitioned its responsibilities to the CFO of the buyer.
Case Study: The Numbers Do Not Add Up
$65 Million Food & Beverage Distributor
Overview
A large middle-market Global Food & Beverage Distributor was reporting profits. However, it had no liquidity being tapped out on its line of credit facility and late on vendor payments. The accounts receivable and inventory balance grew significantly. Unhappy with their outsourced CFO, they terminated the firm.
Solution
Sutker Moran took over the outsourced CFO and Controller roles, diving into the financials and identifying gross mistakes and misrepresentations. As a result of providing the owners with a true, realistic financial picture that reflected significant operating losses, Sutker Moran collaborated with ownership and implemented a major restructuring based on their customer profitability analysis and their strategic zero-base analysis of expenses. With a return to strong, credible profitability, Sutker Moran succeeded in helping the Company obtain more conventional financing that provided sufficient working capital to fund the Company’s growth strategies. As the Company’s permanent outsourced CFO/Controller and management team member, Sutker Moran provides timely and accurate financial statements and analysis, manages cash, develops annual financial projections and interim financial forecasting, as well as recently assisted in the implementation of a new enterprise system.
