Industry:      Manufacturer-Cheese processing and finishing machinery & equipment

Size:            40 employees.

Entity:          Two Non-public corporations.

Situation:    $358,000 consolidated loss in current year; $511,000 negative equity.

Findings:     Steel and other raw material suppliers had stopped shipping.

                    Bank reconciliations were not current or accurate; excessive overdraft notices were occurring for both the regular and payroll accounts.

                    Supplier invoices and mail were stacked up and unprocessed with some items six months old.

                    The previous year-end financial statements were not completed; interim financials for the first 4 months had not been prepared.

                    Job cost records and labor hour information did not exist.

                    Manufacturing throughput was inexplicably long.

                    Major jobs were being accepted without proper pre-engineering, estimating and project management.

                    Cash resources were gone.

Action:         Took immediate control over cash and all financial commitments.      

                    Immediately began calling and communicating with suppliers and working out payment plans and terms for getting product.

                    Implemented a short-term weekly cash forecasting system focusing on completing and shipping orders.

                    Properly staffed the accounting department and got current on all transactions.

                    Stopped the development of all prototypes.

                    Implemented procedures for effectively estimating product costs.

                    Implemented product and job costing systems.

                    Developed a 4-year turnaround and refinancing plan.

                    Restructured debt and obtained additional financing. 

Results:       The company avoided bankruptcy and survived.

                    Achieved break-even by yearend.

                    Within two years, reversed $710,000 product line loss to a $130,000 profit.

                    Improved profitability $393,000.


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