Background
A leading computer networking company approached 8020 Consulting amid a significant organizational upheaval due to its divestiture from the previous parent company. With new ownership comprising major players in the network and electronics manufacturing sector, the company confronted a range of challenges. The executive team underwent restructuring, promoting the former VP of Finance to the CFO position, a dual role that quickly proved unsustainable. Assembling a new finance team demanded clear direction to establish transparent reporting and streamlined processes. Moreover, the Board sought crucial insights into cash flow, the annual operating plan, regional performance, and monthly financial results. Additionally, the presence of interconnected systems and support from the former parent company necessitated a comprehensive cost analysis and a well-structured plan to transition to standalone units, particularly in IT, Finance, and Supply Chain.
8020 Consulting’s Solution
In response to the company’s challenges, 8020 Consulting deployed an experienced consultant to assume the VP of Finance position, igniting a series of measures that fostered positive change. To achieve this, we began by defining clear and well-defined roles and responsibilities within the finance team. Utilizing tools such as RACI charts and conducting regular check-ins, we instilled a culture of accountability and clarity throughout the organization.
Our next step involved the introduction of monthly reporting that aligned with both the Board’s and Management’s expectations. This comprehensive reporting system provided valuable insights into regional cash flow forecasting, monthly results for the Board’s review, and detailed performance metrics ranging from gross sales to margin.
Moreover, to streamline operations and ensure transparency, we established processes for the Finance team during month close. Daily meetings and variance reporting became integral parts of this system, enabling early detection of potential issues in monthly results. This proactive approach not only enhanced transparency but also facilitated the resolution of any arising concerns.
Outcome
Our strategic initiatives yielded remarkable results for the company. By defining clear lines of responsibility and enhancing accountability within the finance team, the CFO could confidently shift focus from day-to-day operations to strategic management. The suite of monthly reports we introduced provided the Board and Management with crucial insights, empowering them to pinpoint areas of concern and take decisive actions. This streamlining of the month-end close process reduced accounting/reporting errors and expedited the book-closing timeline.
The Cash Flow model we presented received high praise from the Board, instilling greater confidence in cash balance outlooks and resulting in the approval of requested cash infusions. The finalized budget provided the entire team with measurable targets, driving the business forward through enhanced performance measurement. Our budgeting and expense reduction strategies reduced operating expenses by approximately $4 million while maintaining a lower run rate. Moreover, our budgeting process allowed for a seamless transition away from the previous parent company’s support structures, establishing self-sufficiency and a solid foundation for the company’s future growth.
