Financial Turnaround Management and Debt Restructuring Services

Marcher was referred to a Northern-Virginia based specialized construction firm doing $15 million in annual revenue.  The firm had no control over its internal bookkeeping, ownership didnít know whether the company was profitable or not, the company was experiencing severe cash shortfalls and was paying its vendors 90 days and more from invoice date, and it had been liened by both the IRS and state of Virginia for unpaid payroll taxes dating back two years.

 

The client engaged Marcher to perform the following functions:

 

            Reconstruct its financial records so that the company could accurately report its finances using QuickBooks accounting software.

 

            Develop a plan for maintaining ongoing internal accounting systems and reporting.

 

            Perform an analysis of the companyís financial condition, clarifying all delinquent taxes and licensing fees due to all local and national authorities.

 

            Prepare a viability analysis with recommendations for changes in staffing, financing, and cash management.

 

            Develop a strict cash management plan to assure that the company meets its tax liabilities going forward and begins to address delinquencies with key vendors.

 

Marcherís staff addressed the clientís bookkeeping systems.  Marcher determined the cash position of the company by reconciling its bank statements.  From this known position, Marcher implemented internal bookkeeping procedures so that day to day financial activity was entered into QuickBooks on a timely basis.  Once new systems were put in place Marcher staff began to reconcile balance sheet account balances so that the year to date accounting records were accurate.  This process of instituting proper internal bookkeeping controls involved using a Marcher Analyst on site for a total of 20 hours per week.

 

Marcherís staff also worked to analyze the company from a macro perspective.  Marcher staff detailed all tax liabilities, reviewed prior year tax returns and reports from the clientís outside accountant to get a sense of the companyís financial history, analyzed its cash position and its status with vendors, and reviewed industry standards to determine where the client was out of line in its cost structure.  From this analysis Marcher was able to prepare an operating budget and a set of specific recommendations for changes to be implemented.

Utilizing Marcher-developed management tools a day to day cash management plan was implemented so that critical liabilities such as current taxes, key vendor payments, and equipment loans were paid on time.  Marcher and client staff members held meetings with key vendor credit managers to begin to improve vendor relationships and arrange agreed-upon plans for meeting the clientís payment obligations with the vendors. 

 

Among the recommendations made in Marcherís viability report was that the company should refinance its real estate mortgage and negotiate a line of credit at better terms.  Marcher determined that the company could save as much as $60,000 annually in interest expense by refinancing these two key credit facilities.  Benefiting from Marcherís relationships with local community banks, the client was able to refinance both loans.

 

In less than 24 months the client was able to turn its finances around, get control of its cash and its financial reporting systems, and repay its tax delinquencies in full.  All liens that had been filed by the IRS and state of Virginia were released.   Marcher continues to server as the clientís CFO, supervising part time bookkeeping staff, preparing monthly financial statements, overseeing weekly cash disbursements, maintaining solid credit and collection procedures, and providing all the other functions that a full time CFO would provide.