Business Case Study: Turnaround of a Non-Profit -- Restore Cash Flow to Further the Company's Mission
Company
Not-For-Profit in Washington DC Area. Cash on hand only 15% of total debt.
Position
Fractional CFO and Controller Services
Challenge
The Director and Board of Directors were faced with a liquidity crisis and were unable to move forward with their mission. Due to a lack of timely accounting, the organization lacked the visibility to properly manage cash and faced a pending shutdown. They had to stop their monthly publication as their vendors had them on hold. The previous accounting firm was not responsive and provided no path to success. In addition, the organization was 2 years behind with their audited financial statements resulting in a lack of confidence with potential donors. This directly impacted the inflow of cash.
Work Performed
Our first course of action was crisis management. Working collaboratively with Senior Executive Management, we immediately prepared weekly cash forecasts and identified areas to delay or reduce cash outflows. We contacted key vendors and negotiated deep discounts while establishing payment plans with some. Loyal supporters of the non-profit were willing to write off entire balances in order to contribute to the long term success of the organization.
Simultaneously, we assumed the roles of Fractional CFO and Controller services, prepared audit-ready financial statements, and become compliant with audited financial statements and the 990 tax return.
Once the crisis subsided, we worked on a monthly reporting package which was presented so they would make informed decision. At this time, we were also able to start a budget process so they could have a roadmap to where they wanted to be as well as have goals to reach.
Outcome
Currently, the non-profit is thriving and growing. Based on current cash flow, they have been able to hire employees to assist with the goal of the company, they are doing online subscriptions and a web store as well as printing a few magazines yearly. Some of the earlier vendors that agreed to have their debt removed are still being used and are getting the proper payment for services rendered. The company has been able to build up a cash reserve so they can continue to make decisions that maximize the purpose of the company.