Case Study - A Small Company's Answer to a CFO

About Analytix

Analytix Solutions is a professional services firm providing virtual accounting, bookkeeping and CFO-level services to small to mid-size companies. Our affordable, customized and scalable financial solutions save companies significant time and financial resources by allowing them to concentrate efforts on maximizing their core business. Many of our clients have recouped over 40% of their in-house accounting costs while simultaneously increasing efficiency. Our secured portal offers clients 24/7 access to their current data, which is critical to running a business. Our customized dashboards provide clients with reports that are specific to their needs. In addition to bookkeeping, accounting and part-time CFO-level services, Analytix Solutions also offers a full range of secondary financial and IT support services including data entry, data migration, systems integration, payroll services and application development.

The company is jointly owned and operated by a CPA and an IT expert with over 40 years of combined experience. Analytix Solutions was founded in 2005 and is headquartered in Woburn, Massachusetts.

About Teamworks

Teamworks was an indoor sporting company which offered a variety of sports and recreational programs in 6 facilities throughout Massachusetts and Rhode Island. The company's members could use its indoor facility as well as outdoor heated pool, climbing tower and challenge courses. Teamworks catered to kids, families, adults, school groups, and corporations with its large variety of classes, leagues, birthday parties and special events.

The Customer's Challenge

Teamworks was an established family sports and recreation center operating six facilities in two states. They had grown significantly over 15 years through a series of acquisitions, which resulted in six separate business units. As every location reported on their own operations, it became increasingly difficult to unify the business lines. Co-owner Tom McLaughlin described, "We had six different facilities which acted like six different business lines. Every business reported financial operations independently. We just couldn't integrate the business."

Teamworks hired a contract CFO to manage the financial reporting, integration and restructuring of their financial operations, but this proved to be extremely expensive and inefficient. Furthermore, the company was not receiving any financial analysis from the CFO. Operating budgets and financial reports took too long to generate. Although the company employed a very strong and knowledgeable controller, they lacked an approval process for entering financial data into their accounting system. As a result, cashflow projections were difficult to predict. These projections were particularly critical to Teamworks because they are a highly seasonal operation. A lack of accurate cashflow projections also impacted the growing company's access to available credit lines.

The Analytix Solution

Teamworks investigated Analytix Solutions at the advice of a colleague, and they initially retained Analytix Solutions for their part-time CFO level services. In order to minimize disrupting the company's operations, Analytix Solutions performed their services in conjunction with Teamwork's existing arrangement for one quarter. McLaughlin indicated, "It was impressive how quickly Analytix Solutions came up to speed. They asked the right questions, really got to know our business and were providing high quality, solid information to us on a timely basis."

Analytix Solutions worked with Teamwork's existing controller to develop and implement accounting approval processes, which resulted in increased efficiency. The customized dashboard that they created allowed the controller to run critical reports that assisted in their cashflow management. Analytix Solutions also assumed managing development of Teamwork's CRM software which required integrating customer registrations from their web site.

Teamworks also hired Analytix Solutions to integrate their billing systems and centralize their financial operations. They recently migrated over to using Analytix Solutions' document management system as part of that centralization. Now invoices from all six locations are scanned and stored as e-documents, thereby allowing the controller to easily track and manage the company's payables and receivables.

Results

Teamworks indicated that the improved quality of the reporting, financial analysis and overall results was immediately apparent after they retained Analytix Solutions to perform these functions. In addition, Teamworks reduced their overall costs by more than 50% by reducing payroll and their IT expenditures. They have also reduced their budget preparation time by more than 50% while simultaneously increasing overall operational efficiency. The company claims an improved financial approval process and centralized financial operations which provides them with more accurate information.

Teamworks plans to further their relationship with Analytix Solutions, and they recently hired Analytix Solutions to integrate their CRM program with their web site interface.

Testimonial

"We had six different facilities which acted like six different business lines. Every business reported financial operations independently. We just couldn't integrate the business. Analytix Solutions helped us. It was impressive how quickly they came up to speed. They asked the right questions, really got to know our business and were providing high quality, solid information to us on a timely basis." - Tom McLaughlin, Owner, Teamworks

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Automating Accounts for Profitability

As we acclimate into a world where speed is essential and computerized work has become the industry standard, automating accounts is now a necessity, not an option.

While automating your accounts results in immense time savings and cost reductions, did you realize its direct, positive impact on profitability?

Accounting and bookkeeping functions are often considered to be heavily dependent on manpower and paperwork. This subjects those tasks to human error, and they are often time consuming, especially when details may require validation or rechecking.

Compare this with the business movement towards e-transactions, where payments become faster and gaps between payments due and payments made are reduced.

Simplify, Streamline, and Cut Costs

When you automate, you receive the benefit of integrating data and information across your accounts. This integration optimizes resources, which means that automating your accounts can simplify your workload.

Unlike traditional accounting where different books are used for different entries, accounting software allows users to create entries in a single field. After this, depending upon its configuration, the software will connect the entry to other similar transactions and add it to the consolidated report. Accounting software can also be linked to credit card or bank accounts. This allows payments from the card or bank account to be dispatched or received, while also getting recorded against the respective accounts. These features not only simplify the process, they free up the cash flow, making money available for operational expenses.

Automating helps reduce the time required to balance your accounts and thus closes a single cycle from payment due to payment paid faster. This translates into increased cash in a shorter period of time. The process of automation helps close the gap between the time incurred to identify human errors and take corrective action, thus accelerating closure.

Do-it-Yourself or Enlist a Vendor?

There are other factors that can help make automating accounts a profitable endeavor; for example, selecting the right vendor. When you choose a vendor, carefully evaluate the deliverables that they promise. Check that the vendor thoroughly understands your business, client deliverables, and any of your requirements. Any recommended solutions for implementation should be directly relevant to your business.

Ideally, the vendor who is entrusted with automating your accounts department should have experience handling and managing the requirements of a small business or a startup. The vendor should also be able to manage the process end-to-end, including providing support and maintenance help after installation.

The idea of automating your accounts is basically to enable you to focus on your core deliverables without losing track of your cash flow and revenue management. In case you plan to undertake the automation yourself, keep in mind that certain areas such as troubleshooting and timely review of the system are necessary.

This means you need experts on standby to conduct regular repairs and troubleshooting when needed. If you plan to implement the automation yourself, you might also need to source IT infrastructure and recruit and retain a team of IT professionals to manage your automated accounts system.

For automating small business accounts, ideally, you need solutions that allow you the convenience and cost benefits of scalability. Scalability refers to paying for only those services that you utilize and not the entire solution. Seamless integration and error-free accounting are key to your time and costs savings.

If a vendor can promise you all this, combined with IT support and scalability, it makes sense to enlist their assistance while you focus on your clients. The more time you free up, the more you can increase your profits by managing more projects or adding value to your client deliverables.

Thus, automating accounts can only add to your profitability.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

CFO Services to Improve Bottom Line

For any company, solid financial management practices are necessary to ensure profitability. As a business owner, where should you focus your efforts- on client deliverables, or on managing your revenue well? CFO services could be a solution to that issue.

Management of Funds

CFO services involve a careful scrutiny of your accounts, including profits and losses. Although this may sound obvious, it is easy to neglect regular account-keeping especially when your focus may be on meeting client requirements. Managing funds is an indispensable part of generating profits. Profitability does not come only from your customers. Practices such as managing costs, reducing unnecessary expenses, and enhancing productivity also play an active role in increasing your profits.

CFO services provide a detailed scrutiny of your revenue sources, revenue generation methods, and costs associated with revenue generation to determine areas that may be leading to decreased profitability. At a minimum, you should be able to answer the following questions about your finances:

• Are your account sheets updated and accurate?
• Do they reflect profits and losses accurately?
• Are you able to identify your overhead expenses correctly?
• Are there overhead costs that could be curtailed?

Managing Overheads

It is important to note that while overhead is necessary for a business to function, it may not be directly involved in revenue or profit generation. Thus, your travel expenses, phone bills, and client entertainment could all be categorized as overhead expenses. However, controlling overhead is not the only way to reduce costs; in fact, cutting too much overhead could negatively impact your revenue stream. For example, if your business offering is such that it requires significant client interaction, then reducing client entertainment overhead expenses may not be the best option for you. Professional CFO services can help you decide if your overhead requires curtailing or not; and if it does, you have access to the expertise to advise you in deciding on how much you need to reduce your expenses.

Managing Debtors

Each time you present a client with an invoice for services rendered, it means your customer is yet to pay you. Unless there is a very strict policy for Cash on Delivery, it is highly likely that a business incurs several invoices per day, amounting to a significant number per month. Each invoice represents customers who are debtors of your company. A collection of these invoices, or a list of your debtors, can be termed as a statement. A statement also contains other details, such as amount owed, date, and amount paid. Debtor aging is an important aspect of this statement. Age here refers to the amount of time a debt has remained unpaid.

When you hire professional CFO services, you are better informed about the state of your company's finances, and hence better prepared to reclaim the money. When debtor age goes beyond a limit that you fix, 30 days for example, you can contact your debtors and follow up on payment.

General Expenses Management

How do you decide whether your business is utilizing resources optimally? Or that the rates you have established for your services are competitive? When you hire professional CFO services, you are provided with informed advice on these types of questions. The CFO researches your accounts thoroughly and undertakes a detailed analysis around the general expenses incurred by your business. The professional CFO is well-positioned to guide you in managing your company's general expenses, including taking corrective action when needed.

Outsourcing the CFO

If you are a start-up or a small to mid-size business, you do not need to hire a full time CFO. Instead, consider outsourcing this function. Ideally, investigate providers with experience managing requirements of businesses similar to yours. This will give you added leverage in the form of their experience and expertise.

Shop around before you finalize your decision on a part-time CFO services provider. Some providers also offer scalability – a big benefit for small to medium-sized businesses and startups. Scalability allows you to tap into industry-standard services and infrastructure while paying only for the services you actually use. Thus, it produces immense savings on investing in infrastructure costs and costs associated with hiring and retaining trained employees.

When you outsource your CFO requirements, you receive the dual benefit of direct profitability through smart financial management combined with savings on investment costs otherwise spent on funding a dedicated CFO position in your company.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.