LMCFO Partners was engaged by a $15MM revenue company in the footwear industry. The client designed, manufactured, and sold quality branded footwear to large retailers throughout the country. LM CFO Partners began working with the client in 2017 to serve as the company’s outsourced CFO. The initial assignment was to assist in streamlining the accounting process, and by instituting accurate financial reporting. During the engagement planning stages, LM CFO Partners noticed that the accounting function for product purchase was on a cash basis. The CFO quickly switched over to the accrual basis to provide a better sense of the company’s overall financial health by applying the matching principle to record expenses in the period they were incurred, and enabling cash flow projections. In addition to converting the internal books and records from a cash basis to the more common accrual basis of accounting, the CFO also developed new accrual reports for the business owners and investors. The shift to accrual basis accounting allowed the manufacturer to better assess its financial health, allowing them for the first time to properly budget their cash flow needs several months in advance.
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