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Jan Bond

Client Successes


Does This Situation Sound Familiar?

Chris Williams has been in the business of electronic components for the last 10 years. Late last year he bought out another component manufacturer. He immediately saw an increase in sales as he took on the new customer base. He didn't think about the cost side of the business.

After 3 months, he started to run out of cash and fund the business with his own line of credit. In addition, he had to find additional warehouse space to store parts. Chris went to the bank and increased his line of credit, but now he was starting to loose sleep because he knew the dynamics of his business changed but not why…

Discovery about acquired company:

  • Excess inventory tied up in the acquired business
  • Stated terms of 30 days but offered customers 45 days
  • Paid vendors when it got the invoice
  • Customer checks sat in the admin's in-box until she got around to going to the bank
  • Employees on multiple payment cycles

Resolution:

  • Sold off some inventory on e-Bay and worked down the parts inventory
  • Determined they needed a 5 day supply for parts
  • Started paying vendors in 30 days
  • Slowly started moving customers to 30 day terms
    Moved customers with bad payment history to credit cards
  • All employees are paid on the 15th and last day of the month
  • Cash flow forecasted weekly by office admin

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