Some service companies are more complicated than others. One of Miller CFO’s clients was a company that hired consultants, then sold their services to other companies on a contract basis, sometimes through a third-party agent. In this case, it was imperative to keep everyone happy – the consultant-employees, the end-user clients, and the intermediary third parties. It was also imperative to keep a close eye on gross margins, and to leverage existing overhead staff over more and more consultants.
As the company grew, the owner/CEO realized that he needed an accounting structure that would support his vision for continued growth. Miller CFO Services was recommended by the company’s CPA firm and by a management consultant.
“Miller CFO had an immediate impact, giving us a level of financial oversight that we had been lacking. Bill focused quickly on key issues that we were facing and proposed solutions that met our needs,” the owner recalls. After an initial assessment, the owner chose Miller CFO to help chart a path, initially over a six-month period.
One of Miller CFO’s first steps was to restructure the profit & loss statement so that it showed the company’s direct costs, gross margins, and overhead expense separately. With this change, the owner could use his knowledge of the volume and gross margins of individual consultants to better forecast profitability. Miller CFO also guided staff to start monthly financial reports. “Bill transformed our accounting structure from a historical record into a proactive, forward-looking decision support tool,” the owner says.
The next order of business was to deliver the annual package of financial information to the auditing firm for review, by January 31 of the coming year, which would have been the first time in several years that an extension had not been required. With Miller CFO’s guidance, the Controller and the accounting staff met this goal for the next two years—thereby reducing the demand for extra work by the accounting firm, and the associated fees. (In the third year, the accounting firm performed an audit, as discussed below.)
When the large bank that the company had been using became subject to regulatory complexities that prevented optimal servicing of the account, Miller CFO recommended a smaller local bank that better met the company’s needs. When the CEO wanted to change the timing of the monthly financial reports, Miller CFO helped guide the transition, producing comparable financial reports to prior periods where possible, and analyzing results in terms of underlying volume and cumulative individual gross margins. “Bill’s analyses were always succinct and helpful,” the owner notes. Miller CFO was also able to help coordinate the financial results of the CEO’s several international companies into a coherent pattern that made it possible for the owner to monitor each entity.
When the owner decided that he wanted a complete audit of the company’s financial reports instead of just a review, Miller CFO worked with the Controller and the audit firm to ensure that not only were the financial reports delivered in plenty of time, but that several new controls were implemented to make it easier for the auditors to render a clean opinion.
Ultimately, the 6-month assignment turned into nearly a 3-year engagement that terminated only when the CEO decided that he needed a full-time CFO to handle the company’s growth.