CFO Stabilizes Organization's $2M Negative Working Capital to 76% Revenue Growth

A client was faced with negative working capital of $2 million, losing money every month, and struggling to make payroll every two weeks.

One of our partners took the immediate steps necessary to stabilize the business financially to attract investors and put the business into a growth mode.

With the partner’s experience in finance and operations, the business finances were stabilized and improved by:

• Conducting a top-down detailed review of revenues and expenses involving every manager within the business.
• Reallocating monies to revenue-generating activities and eliminating non-essential costs.
• Placing each function of the business on a budget with monthly and quarterly goals.
• Measuring each manager’s performance to KPIs on a monthly basis. If KPIs were not met, immediate action was taken to stay on course.

As these actions were taking place, the partner took steps to conserve cash until the business’s downward trajectory stopped as there was no access to debt financing.  Such steps included immediately making the necessary cost reductions as well as supplier payment delays as a source of temporary financing.

Within a year, the gross margin had improved by 12%. In addition, selling, general and administrative expenses were reduced by over 10% with revenues increasing by 76%.

For the first time, the company had a positive operating income. As a result, investors were found to provide much-needed working capital for future growth.