Case Study #1
The Mortgage Industry changed instantly and the Company needed to quickly adjust its direction to minimize its losses and liabilities. This company needed to rebuild and restructure in the new mortgage industry environment. They also needed to have an exit strategy if they could not overcome the liquidity and capital issues that plagued many Mortgage Banking companies.
The Accounting Experts promptly identified all possible liability exposure and began negotiating with all the creditors, including secured and personally guaranteed creditors to minimize their potential losses. We prepared a forbearance agreement to address the immediate default status the company was in with the warehouse line of credit, and began negotiating terms that were reasonable for both parties. After an extensive analysis of projected losses and projected gains it was determined that an exit strategy needed to be implemented. Cash flow management was a high priority and we began to retain funds by scrutinizing and evaluating what should and needed to be paid and what could be negotiated down. As a result, our initial cash flow projection concluded that an additional $200k infusion of cash would be needed to unwind the business. After minimizing the liabilities, we were able to dissolve the company with a positive cash of $80k and they avoided filing for Chapter 13 Bankruptcy.
Case Study #2
This Company was struggling from a liquidity issue. Profits and margins were good, but cash-flow was a constant issue for this company, which hindered their growth and the owners of the company were on the verge of closing down the business due to this overwhelming problem.
The Accounting Experts evaluated and audited the business processes in the accounting department. We were able to identify that the accounts receivable and the accounts payable procedures could be improved. We implemented new internal controls, which reduced the operating expenses that were directly affecting the cash flow. We put into practice a credit/collection process which decreased their A/R aging dramatically. We renegotiated credit terms with their creditors to slow the outflow of cash. We also reduced unnecessary expenses that reduced their outflow of cash. After these new processes and procedures were implemented this Company went from an average balance of $25k in the operating account to a $245k average balance in the operating account. This significant improvement in the financial situation enabled us to leverage these funds and reduce their monthly interest expense by renegotiating their interest rates associated with their lines of credit.
Case Study #3
This Company had been continuously losing money in the last couple of years. Production and volume was high, but the company did not know precisely where their leakage was.
The Accounting Experts began by auditing the pricing models and processes to identify any leakage in pricing. After our review we discovered approximately $50k in pricing errors. We began the process of recovering those revenues from the investors and implemented procedures going forward to eliminate the losses. We also evaluated the margins associated with the loss. During this process we identified that the pricing margin which had been established by the Company was insufficient to achieve profitability, based on the current overhead structure. We also recognized that certain product offerings were bringing down the overall margins and should no longer be offered. We began to evaluate costs associated with the products and recognized that some of the costs were unnecessary and found other vendors that could provide more services for less cost. We identified ways to increase their closing ratio through training and process improvement, therefore reducing their fallout. After we had implemented the new processes, within 2 months the company was making a small profit compared to the last 6 months where they were losing $100k per month.
Case Study #4
This Company had several operating branches located in different regions from the parent company which had been acquired over the years. The branches operated with complete autonomy making it difficult to share resources. The parent Company believed that changing this structure with the branches would generate greater profits by utilizing a centralization structure. However, when the parent company began working with the branches to implement this structure they quickly felt resistance from the branch.
The Accounting Experts were challenged with implementing new systems, technology and procedures/processes which mirrored the parent company. This of course was a very complex task, considering the many obstacles we had to overcome (i.e. the stigma that corporate was taking over, the branch felt that somehow they did not operate effectively. The branch also realized that all of the ways they knew how to operate were going to change and they would now have to take direction from the corporate office, employees that they did not know and now they would have to trust). Our approach was to create immediate buy-in and communicate how this process would help them to become more successful. We did this by giving them the opportunity to volunteer to create their own destiny through this process. We created a task force team and we identified the subject matter experts within each area and asked them to also participate in this task force team. The objective for this team was to learn the system completely, re-engineer the processes/work flow to accommodate the new system, and communicate effectively with their peers about the implementation progress while getting as much participation from everyone. We were able to successfully implement all the changes without increasing overhead, without any downtime, and the employees embraced the changes and took complete ownership of the changes within their area.