Financial Discipline & Analysis

It’s not difficult to grow revenue…IF one doesn’t care about profitability.  And, it’s not difficult to be profitable…IF one doesn’t care about growth.

Doing both at the same time requires a little magic.

Our approach to driving top line growth is supported by a foundation of disciplined financial analysis that serves to drive decision making within a company. It’s this coupling that allows not just revenue growth, but improved gross margins as well.

Gross Margin Analysis

Financial Discipline & Analysis is about knowing your numbers. If you cannot measure it, you cannot manage it. The concept is as simple as that.

Applying that simple concept may not be easy, however, but we can help – we have done it many times.

You may have accurate financial statements with respect to gross revenue and net income. However, do you capture sufficient data to measure revenue by product or service line, by SKU, by channel, by territory and by salesperson?

Most businesses have an accurate annual cost of sales number on a company-wide basis. But do you know cost by product or service, by customer, and by channel? How do you allocate overhead? By using an overall bucket approach, or by using something more refined and specific for actual costs incurred by product or service line? With accurate data for all products, customers, channels, geography and beyond, you can make informed decisions resulting in Top Line Growth with Improved Gross Margins.

We rigorously review your data and costing methodology and processes to determine the accuracy – and therefore usefulness – of your reports. If you do not have such reports, we will work with your finance and accounting team to create and implement them.

Optimizing Cash Flows
The key to optimizing cash flows is keeping your cash-to-cash cycle time as short as possible. A top performing company will have low costs, quality products, and short cash cycle times. By liberating cash that is locked up in inventory or receivables, or going too quickly to vendors, you will increase working capital in your business in the best, least expensive way possible. We work with management to identify and implement improvements in all working capital areas – including contract terms, contract milestones, system float, and taking advantage of discounts.

Financial Modeling and Forecasting
Reliable financial models are crucial for evaluating new business initiatives, raising capital, measuring the performance of your management team, and for competitive intelligence. This is particularly imperative for cash constrained companies to ensure that they will not run out of cash. An excellent plan for growth that is not harmonized with the forecast of available capital is a recipe for disaster.

There are many affordable software tools available that facilitate the preparation of models and forecasts, and most companies have people who are good with spreadsheets and can build a model. But is it the right model? Will it have valid assumptions? How well does it predict market share changes and growth rates? Is it dynamic – easily updated to reflect actual results that show assumptions need to be modified? We carefully review your existing model and suggest areas for improvement, or build models from scratch, as needed.

ROI-Based Decision-Making
Every material business decision should be backed up by a documented business case. Whether your company is undertaking a large capital project or entering a new channel, the documented business case is equally important. If you lack sufficient data to support the business decision, whether related to marketing, sales, IT, HR, product development, or any other area, then you are subjecting your business to many risks, despite apparent opportunities. We quickly help establish the capability to make business decisions based on a desired return. Imagine how much earnings will improve if bad decisions are eliminated and only good ones are made?