PROFITLINQ CASE STUDIES
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Setting up a scalable finance function beyond the kitchen table
Our web app developer client started his company-- like most companies do-- at the kitchen table or, in his case, his garage. When the company grew, however, the finance and accounting processes got left in the garage. Despite having a multi-million dollar business, the founder was handling the bookkeeping himself, and managing cash flow via spreadsheets and an online tool. He scrambled to produce financials when requested by outside parties and didn't have a budget in place to monitor his progress against his goals. He was quickly outgrowing his current process. We stepped in as CFO, where we coached and trained an in-house bookkeeper. We helped convert his accounting system to one that would produce accurate job costing records, and yielded product line profitability. We also restructured his financials to give him insights and allow him to scale. Lastly, we developed a budget, set monthly closing schedules, created regular reporting with dashboards of KPIs, and meet at least monthly for financial reviews and strategy sessions.
Right-sizing the accounting system: ERP selection/deselection
Services: CFO/ Advisory
We often come across companies that have either outgrown their existing accounting system or are on an ERP (Enterprise Resource Planning) system that is overkill for their needs. After evaluating their needs and workflow, we helped a small startup who was on a mid-market accounting system convert to QuickBooks Online. And we have also assisted rapidly growing companies determine when it was time to move off of QuickBooks or Xero to an ERP. After working with a mid-market service- based company for a few years, and maximizing the use and functionality of QuickBooks and relevant apps, it was time to upgrade them to an ERP. The client needed an integrated solution that handled the full order to cash process, from a CRM, to scheduling, and from purchase orders to full financial reporting. We mapped the clients’ workflow, disparate and manual processes, met with the leadership team extensively and came up with a prioritized list of requirements. We then went to market to find a solution that met as many of the needs as possible. We pre-vetted the systems using the requirements and brought a short list to the client. After going through the demos themselves, the client selected a system and worked with the ERP’s team to integrate. We stayed on in a pseudo project management role, to ensure that the system roll-out, and any customizations met the objectives of the client as we determined in the requirements.
Financial system and reporting setup: working the "digital shoebox" into solid financials
Services: CFO, Accounting
We worked with a startup company that had been operating for a year but had kept no formal accounting system other than a number of spreadsheets in various locations. The spreadsheets worked fine for a while, however the client needed to raise funds from outside investors and file his taxes. That meant he needed credible, auditable financials to be put in place. Our team met with the client to get an overview of the business so we could properly set up the books, and then took his various spreadsheets and receipts (what we lovingly dubbed his "electronic shoebox"), and set up a QuickBooks file, recreating the financials for the fiscal year and giving him a complete set of accurate, up-to-date financials to present to investors.
Helping the founder who drew the short straw: Pitch-deck financial model review
We worked with a tech startup who was seeking a Series A round and wanted a second look at their financial models they had used for their pitch deck. We like to joke that the founder who has to handle the finances for a company drew the short straw when the partners were divvying up responsibilities. In this client, one of the founders was responsible for the projections and the financials, despite not having a financial background. We reviewed his projections, indicated a number of areas where the assumptions were unreasonable and uncovered some significant infrastructure costs that were missing entirely. This helped them to revamp their model, understand their cash runway, and look at the total funding they were seeking and re-evaluate their ask and options.
An off-hand conversation yields $10,000+ in savings-- Maximizing the R&D Tax credits.
We work closely with our clients' tax advisors, whether that is sharing our projections for the business for tax planning purposes or having strategic discussions around what is changing in the business so the tax advisor can help mitigate the tax liability. When we had an off-hand conversation with the CPA about the client, he mentioned that the client could qualify for R&D tax credits. We worked with the accounting staff to thoroughly review the financials and projects and came up with tens of thousands of dollars in tax credits. More than just an auditing exercise, we proposed a new structure for new contracts to allow them to claim the R&D credit in the future.
Going beyond flattery-- Financial and projections and strategy for investor conversations
While it is flattering for an investor to show interest in a company, it doesn't always mean it’s a good move. When our client was approached by an investor we helped him take a step back and look at the offer from an objective, unemotional perspective. It triggered some strategic internal conversations about the long-term plan for the business and whether it made sense to "go it alone" or bring on outside investment. As part of these discussions, we pulled together a five year model of projections, ran scenarios based on growth assumptions and helped the client recognize his options from an objective and informed perspective.
Conquering the complexities of crypto accounting
Services: Crypto Accounting
We worked with an early stage FinTech company that transacts in crytpocurrency. They were looking for a way to record their crypto transactions and had approached a number of accounting firms and accounting software providers before they were referred to us. Before we set them up with a crypto accounting system, we met with them to discuss their crypto workflow, both now and in the future so we could select a system that would be able to scale. We then selected a system, integrated it with QuickBooks, and are properly recording crypto transactions with the right basis. In addition, we took their existing QuickBooks file, cleaned up the incorrect automation rules that were set, restructured the chart of accounts, and maintained their ongoing bookkeeping.