Bio Research Company Strengthens its Financial Function to Enable Rapid Growth
A company that facilitates bio research had grown in revenues at an annual rate of 35 percent over the previous seven years, but its finance organization had not kept pace with its growth. The finance organization consisted of a CFO and four staff with no controller. With large pharmaceutical companies as customers, it had become a global company but was still using an unsophisticated accounting system to track its results. A private equity firm had purchased a controlling stake the prior year and the audited financials required for this transaction noted substantial material weaknesses and control deficiencies. The monthly close typically took 20 days or more and the new owners were not getting timely or insightful information on the financial position of the company. All of these issues combined put the company’s aggressive growth objectives at substantial risk.
A NextLevel partner was brought in to assess the finance operations, identify gaps between the company’s current and ideal performance, and develop a plan of action for bringing the finance organization to a state where it could serve current and expected future needs, including enabling rapid scaling of the business. The NextLevel partner evaluated the steps needed to get to that desired state and developed a plan of action. Some of the recommended early actions included hiring a controller, completing selection and implementation of an ERP system, bringing in new team members trained in finance for a global company, and strengthening control processes.
After presenting the findings and recommendations from this assessment and gap analysis (the Desired State Roadmap™) to the CEO and Board, the NextLevel Partner was engaged to implement the plan – first on a project basis and then as interim CFO. Two other NextLevel executives were brought in to establish effective procedures and controls, and to implement proper change management procedures for the new ERP system. She also hired a controller and executed the other steps included in the sequential plan that, in addition to those mentioned above, included setting up Key Performance Indicator (KPI) scorecards and more sophisticated budget variance reporting using the capabilities of the new ERP system.
In only three months, the time to close each month was cut in half to 10 days. All material weaknesses and control deficiencies were corrected. The private equity owners were pleased not only with the timeliness, but with the quality and insight provided by the new management reports. With better controls, systems, and transparency for management, the company was able to pursue its growth strategy with confidence.