Growing Private Software Company with Need to Upgrade Financial Management and Bring Accounting Function In-House
The Challenge:
The client, a VC backed software company, was interested in upgrading their financial management and bringing their accounting function in-house. The client was facing the following challenges:
The client, a VC backed software company, was interested in upgrading their financial management and bringing their accounting function in-house. The client was facing the following challenges:
- An outside accounting firm was doing a good job of outsourcing the basic accounting functions and reporting; however, Management and the Board wanted to accelerate reporting and expand operational reporting, including more comprehensive budgeting and forecasting.
- The CEO was quite capable of managing the financial side of the business; however, this took time away from the high priority tasks of driving product development and revenue growth.
- The company wanted to improve their financial projections.
- The board was looking for an experienced executive to be a sounding board for the CEO and the Management team on general software industry issues.
- The board wanted to ensure that revenue was being properly recognized.
- The board was looking for more useful and insightful reporting at the Management and Board levels.
What Lauber Business Partners Did:
- Lauber Business Partners, Inc. drew from its broad-based team of professionals and assigned an experienced CFO who had software industry experience.
- The Lauber Business Partner with the assistance of an internal administrative assistant:
- Implemented QuickBooks and the accounting records and processing were brought in-house.
- Arranged for Administrative Assistant to attend QuickBooks seminar to get build competency quickly.
- Established written procedures for month-end closing procedures and reviewed and revised the closing and financial statement process.
- Established a comprehensive monthly reporting package including financial statements as well as additional useful operational reports (e.g. order, backlog and revenue details, department cost center reports compared with budget, headcount analysis, forecasts, etc.)
- Implemented percentage of completion accounting to properly recognize revenue on certain large professional service engagements.
- Over time, the Lauber Business Partner improved the budgeting and forecast models by expanding the detailed build-up of different revenue channels (direct sales, resellers, partners, etc.) along with breakdowns for licenses, support and maintenance, third party re-sale, and professional services (i.e. training, installs, etc.). The forecast model is continually updated with a combination of actual results, resulting in a rolling forecast and increased ability to manage the business.
- The Lauber Business Partner implemented a 13-week detailed cash forecast model to review and take action regarding working capital status. This was eventually extended to include an additional 12 weeks in the forecast.
- A Financial reporting package is prepared and circulated monthly on a timely basis to Management and Board members. A high-level financial package and PowerPoint is prepared by the Lauber Business Partner and presented at bi-monthly board meetings.
- The investors required an annual audit. The CFO arranged to retain a CPA firm and worked with them to complete the audit on a timely basis.
The Impact:
- Relieved CEO and other managers of financial management and reporting duties so their time could be dedicated to driving revenues.
- Better and timelier reporting, budgeting, and analysis furnished to both Management and the Board in support of decision making.
- Improved cash forecasting provided visibility to make adjustments during the downturn such that the company avoided the need to borrow or ask investors for an additional capital injection.
The Value of a Lauber Part-Time CFO:
Engage a seasoned Chief Financial Officer with extensive skills, experience and strategic insight without paying for a full-time resource. With the Fractional model, you can engage an executive leader on a flexible part-time basis—a day or two a week, once a month, or as often as needed—at a cost you can afford.
- Extensive domain expertise in senior financial position.
- Improved cash management, resulting in better capital management.
- A trusted advisor to owners/CEO and Board on many matters.
- Looks at business through perspective of maximizing competitiveness and long-term enterprise value.
- Extended tenure with clients helps develop stronger financial and business acumen for client’s leadership team.
Engage a seasoned Chief Financial Officer with extensive skills, experience and strategic insight without paying for a full-time resource. With the Fractional model, you can engage an executive leader on a flexible part-time basis—a day or two a week, once a month, or as often as needed—at a cost you can afford.
