Reaching Your Organization’s Potential: A Case Study

Our CLA team sat down with a professional services organization whose long-term CFO was planning to retire. Client leadership did not know how the CFO was able to accomplish all the things he did, and while the CFO had consistently done a fine job, leadership was convinced they could possibly get more out of their finance function to help the organization grow.

Our CLA team was engaged to perform a Business Opportunity Assessment (BOA). This assessment began with a review of people, processes, and systems. These initial steps were intended to determine and document the specific activities of the client’s CFO and to understand what may have been getting in the way of achieving their growth objectives. Each step of this assessment was tailored to the client’s individual needs. In order to gain a clear overview of a BOA’s effectiveness, we will take a step-by-step look at this particular situation.

The Business Opportunity Assessment

A look at people

From a people perspective, we determined that the hours necessary to complete the accounting and finance functions did not justify a full-time position. We also understood that the current CFO would be retiring soon. Based on these facts, we suggested that the client should hire a part-time CFO replacement. The challenge was — as our client had already realized — where could they find an experienced, trusted, and part-time CFO who would understand the clients’ industry, have a flexible work schedule, and would not mind doing staff-level work along with the more complex work that this position required?

While a person with these skillsets and qualities may exist, the client was convinced the person would be very difficult to find, especially when the requirements are further narrowed to one geographic market.

A look at processes

After a look at people, our BOA team walked through the major accounting and finance processes with the current CFO. We quickly recognized and confirmed that the current processes were producing accurate records that were easy to follow; however, the processes were very manual and time intensive. From this process assessment, we were able to give the client peace of mind that it wasn’t an impossible task for a trained accountant to understand what needed to be done and to take over the existing responsibilities, even though the current processes looked complex from a non-accountant point of view. The manual nature of the processes, however, caused the CLA team to move forward with a deeper assessment of the client’s systems.

A look at systems

When reviewing the client’s accounting and finance processes, we found that all processes were performed outside of the client’s accounting system. These processes included project budgets, customer invoices, bank reconciliations, cash flow forecasts, accounts receivable balances, time tracking, and expense reimbursements — which were all calculated or tracked in spreadsheets and stored in a variety of places across the company’s network. The CFO would then manually enter all accounting records into QuickBooks Desktop at the end of each month. Not only did this last process take additional time, but the re-keying of data was greatly increasing the risk of error.

The solution

Outsourced accounting

We recommended that the client utilize an outsourced accounting team with relevant industry experience and complement that team with a new, cloud-based technology stack.

With an outsourced accounting team, staff accountants perform the staff work while a knowledgeable consulting controller or consulting CFO with industry experience performs the more complex functions. Each team member works the hours required to perform the job, and there are no issues with having to flex hours according to the client’s needs, allowing for the project fees to become a true variable cost.

Efficient, cloud-based technology

For their technology solution, our team spent less than half a day converting QuickBooks Desktop to the cloud-based QuickBooks Online (QBO). We originally chose to convert to QBO simply because of its integration capabilities with other platforms. However, within a month of starting our engagement, a cloud-based accounting solution became a necessity as COVID-19 temporarily shuttered many of the client’s physical locations.

To complement QBO, we also recommended a professional services automation system to our client that would allow them to capture all project data in one centralized and secure place. They could record project budgets, time tracked to projects, customer invoices, project expenses, and paid time off, and use this information to automatically generate a Work In Progress (WIP) report needed for revenue recognition. The new system captured all project and financial data points needed to run their business in one place and integrated seamlessly with QBO as the general ledger.

Holistic services and support

Beyond the solutions we implemented as a direct result of the BOA, CLA now provides a number of additional services to this client and CLA’s relationship with the client continues to grow. CLA prepares the client’s tax returns; helps them apply for research and development tax credits; and administers their 401(k) plan. CLA also guided them through the process of successfully applying for and receiving two Paycheck Protection Program loans and has provided outsourced human resource services to help evaluate and amend their paid-time-off policy in compliance with state laws.

Impacting growth

At the time CLA performed the BOA, our team kept focusing on the growth pain point. We wanted to understand how our client defined growth and we repeatedly asked the client “Are you achieving the desired growth percentage or number?” We also asked, “Are you adding to the team, serving different markets, or leveraging down the work?”

The answer to all of these questions was “NO.” Client management did not have a group of shareholders, other than themselves, to report to and they were satisfied with the lifestyle that their profitable business afforded them. Understanding that the measure of success is crucial when helping develop and provide solutions to clients, it was very important that we fully understood what growth meant to them.

After multiple conversations with this client, our team discovered that growth, to this client, meant control. They had interesting projects, happy clients, engaged employees, and profits to keep the business going. But they didn’t know how they were achieving the level of profits, nor had they identified the likelihood of various unexpected or unplanned events and how these might completely derail their business.

In summary, client leadership felt out of control. They were not certain if they were pricing their projects correctly, or which projects actually were making a profit. They didn’t know if they were budgeting their team’s time appropriately, and they did not have a resource capacity plan. This meant they didn’t know how to manage their pipeline and when to bring on additional personnel if needed. They weren’t even sure if they were invoicing for the full project contract value. This assessment showed that it was possible that they were putting in the work and leaving money on the table.

Our BOA uncovered that what our client needed most was structure, automation, and insight into their business processes to give them control of their future. Our solution incorporated the concept of control and transparency into every process and system that CLA implemented. The owners were finally able to access the software that captured all of their project data in order to analyze project performance versus budget, team capacity and utilization, and project profitability.

Recently, our client asked us to build their 2021 budget to incorporate an actual growth target. This was the first budget and quantitative growth objective in our client’s history. It was only possible to build such a budget because they now had accurate data necessary to plan their pipeline, cash flows, and capacity — all centrally located. For the first time, it was possible for our client to think in terms of real revenue growth, because they now had the correct tools to control the future of their business.

How we can help

This is just one story of what a BOA can do for you and your company. Maybe your organization feels in control, but is concerned about the efficiency of its processes and systems. Maybe it’s a matter of having a third party come in and analyze unseen growth opportunities. At CLA, we understand that every organization has its own specific needs, which is why we’re here to help you develop and implement holistic and customized solutions. 

Give Your Financial Future Its Moment