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Business Financing Blog
Mohamed Noohu: Posted on Monday, February 20, 2012 4:05 PM
ASSIGNMENT: The company was experiencing cash-flow problems because they were in a growth phase. There was no structured accounting system, and no reports were done. The CEO wanted an in-depth study done, with an action plan. MSN Associates began by analyzing the firm’s working capital cycle and realized that billing dates were later than client deadlines, increasing AR days, and exacerbating the cash needs in a growing company where salaries were the biggest cost. Due to rapid expansion, the company experience declining profitability and cash flow pressures. We did a comprehensive management accounting analysis to pinpoint problem areas, where we discovered that profitability was declining due to leakages in possible billing time, etc. TIME PERIOD: Twelvemonths STORY: MSN instituted a rigorous, periodic billing method to meet deadlines, and installed an accounting system, as well as recruited and trained a bookkeeper to deliver timely reports. As the company expanded, we obtained bank facilities and set uprobust routines and reviews to manage profitability, then led an initiative to form and educate an internal steering committee to manage the company, to alleviate some of the mundane work from the owner. We held internal training sessions to improve employee management capability, including various leadership books and reading material.
MSN set up and conducted a retreat for a strategic planning session- resulting in a new name, vision, mission statement and action plan. We then engaged organization consultants to improve operations, and new software to improve operations and to focus company investment in designing and implementing a detailed performance improvement capability. We shifted the senior staff to performance based pay. RESULT: - Solved cash flow problems at each stage of growth - Improved profits in a declining revenue period to be the best year of profits in 5 years. - Developed a strong management team from existing staff - Set up a long term management to focus on company growth - Strengthened infrastructure in marketing, operations, and finance to serve long-term goals - Ensured that company work processes and opportunities set it apart from competition Minding your business by designing, building, implementing and sustaining financial management practices that increase business value. (213)784-2557. mnoohu@msnassociates.com. www.msnassociates.com
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