Eight of the seventeen we work in are set out below. If yours is not one of them, or you sit between two, the four questions further down place any business in about a minute.
This is why a general finance function underperforms in a specific business. Reporting built to the shape of the accounts will show you both of these companies as healthy. Reporting built to the measure that governs them shows you the distributor’s stock position and the contractor’s job margin in the first month.
It is also why we pick your lead from your sector. Someone who has run finance in your industry already knows which measure governs it. That arrives on day one rather than in month four, and the firm’s specialists in that sector come with them.
The accounts are accurate at completion and meaningless before it. Work in progress is a plug — someone’s percentage-complete estimate, unchallenged, carried forward. Jobs look profitable until the final account, when retention is disputed, variations were never priced, and the margin that was bid has quietly gone. Meanwhile the surety has held the bonding limit flat for two years because the WIP schedule it receives is not one it can rely on, and nobody has asked why.
We rebuild costing at the job level with a defensible basis for percentage of completion — cost-to-cost, or units where that is more honest — and we make the estimate that won the job the benchmark it is measured against every month. Variations get priced when they are instructed, not argued about at the final account.
Retention and holdback are tracked as the receivable they actually are, with a release date against each one, because on most contractors this is the single largest pot of unrecognized cash on the balance sheet.
Then the surety relationship: a WIP schedule they can rely on, delivered on a rhythm, with the same numbers in it as your management accounts. Bonding capacity moves when the surety trusts the reporting, not when the revenue grows.
Know a job’s real margin while there is still time to do something about it. Give your surety a schedule they will lend against. Collect retention on a date rather than eventually.
The business is profitable and has been for years, and it still draws on the operating line every month. The cash is in two places and both are measurable: stock that stopped moving but is still being reordered because nobody revisited the reorder point, and receivables that nobody chases because the customer is important. Landed cost is a guess, so the margin on imported lines is whatever the system says it is. And the largest customer is usually the worst one, but nobody can prove it because overhead is allocated on revenue.
We decompose the cash conversion cycle into days inventory, days receivable and days payable, and work the one with the most cash in it first. Stock gets aged by SKU against actual turns, with obsolescence recognized rather than deferred, and reorder points recalculated on real demand instead of a setting from three years ago.
Landed cost is rebuilt properly — freight, duty, tariff, currency and handling loaded to the item — because a distributor that does not know its landed cost does not know its margin.
Then customer and SKU-level profitability with cost-to-serve allocated on orders, deliveries and returns. It routinely reverses the ranking of the top ten accounts.
Say exactly how much cash is trapped in stock and how much comes back for each action. Know which accounts you are subsidising. Price imported lines on their real cost.
The standard cost was set when the plant ran differently and nobody has revisited it, so every variance is explained away rather than investigated. Absorption is spread over a volume the factory no longer produces, which makes underused capacity look like profit sitting in inventory. Capital gets approved on payback calculated from optimistic volumes. And the bottleneck — the machine or the cell that actually governs output — is rarely the thing the reporting is built around, so the business optimizes everything except the constraint.
Standard costs are rebuilt against current routings and current rates, and variances are split into the ones that mean something — usage, rate, mix, volume — so a purchase price variance stops being a rounding item and starts being a conversation with procurement.
We identify the constraint and report contribution per constrained hour, because in a plant that is the only profitability number that governs a decision. Product mix, pricing and capital all get judged against it.
Capital cases are built on realistic ramp, with maintenance capital separated from growth capital so the two are never traded off by accident, and reviewed after the fact against what was promised.
Know which products earn their place on the constrained line. Explain a variance instead of absorbing it. Approve capital against a case that will be checked afterwards.
Everyone is busy and the firm is not making money. Utilization looks fine, which is why nobody investigates — but utilization only measures whether time was recorded, not whether it was worth anything. Realization is eroding quietly: work written off at billing, scope that grew without a change order, juniors on work that should have been leveraged differently. Work in progress and lock-up climb because nobody bills promptly and nobody chases. And partner economics are a matter of history rather than contribution.
We separate utilization from realization and report both, because the gap between them is where the money goes. Realization is tracked by client, by matter and by team, so the write-offs concentrate visibly rather than averaging out.
Scope discipline is made mechanical: what was quoted, what has been delivered, and what has been added without a change order — reviewed monthly while the client relationship is still warm enough to have the conversation.
Then lock-up: WIP days plus debtor days, tracked as one number, with billing frequency and collection treated as a process rather than an afterthought.
See which clients and which teams are giving away margin. Bill and collect on a rhythm. Have the scope conversation while it is still easy.
The group number is fine, so the group number is what gets looked at. Underneath it, two sites are carrying the estate and two are draining it, and the average conceals both. Labor is managed as a percentage after the fact rather than scheduled against forecast demand. New sites are opened on a payback model that ignored the ramp and the pre-opening cost. And the lease — usually the second largest cost in the business — is treated as fixed and unexaminable, when in fact it is the thing most worth renegotiating.
Every site gets a four-wall P&L on the same basis, with central cost shown separately so a site is judged on what it controls. Ranked, every month, with the bottom two discussed by name.
Labor is scheduled against forecast covers or footfall rather than reviewed afterwards, and input cost is tracked at the item level where menu or range engineering can actually move the margin.
New sites are modeled with a realistic ramp, full pre-opening cost and a cash payback that is measured after opening. Lease economics — rent to revenue, break dates, renewal windows — are put on a calendar so a negotiation begins before the option expires.
Rank every site on the same basis and act on the bottom two. Open the next one on a model that has been tested against the last one. Renegotiate a lease before the break date passes.
The group grew one SPV at a time and now nobody can produce a consolidated view without a week of spreadsheet work. Debt sits across several lenders on different terms, with covenants tested at different dates on different definitions, and nobody has modeled them together. A development consumes cash for two years while the accounting shows capitalised interest and no problem. Refinancing gets addressed in the quarter it is due, which is the worst possible time to be asking.
Entity-by-entity reporting and a consolidation that reconciles, with intercompany and eliminations traceable rather than plugged. One chart of accounts across the structure, whatever the lender-driven entity sprawl looks like.
Every facility modeled on its own terms — amortisation, covenant definitions, test dates, cash sweeps — and then modeled together, so group headroom is a number you know rather than a number you discover.
Development cash flow is forecast to completion with the funding drawdown schedule alongside it, so the cash trough is visible eighteen months before it arrives. Refinancing conversations start two to three covenant tests early.
Produce a consolidation a lender will accept without explanation. See group covenant headroom before a test date. Start a refinancing from a position rather than a deadline.
Growth is being bought and nobody has checked the price. Acquisition cost is calculated on marketing spend alone, so the real payback is longer than anyone thinks, and the cohort curves that would show it have never been built. Revenue recognition is loose enough that an auditor or an acquirer will restate it, usually over multi-year contracts and set-up fees. Runway is quoted from the current burn rather than the committed one. And the board pack reports bookings, ARR and revenue interchangeably.
We build cohorts properly — retention, expansion and contraction by signing period — so net revenue retention is a measured figure rather than an assertion. Acquisition cost is loaded with the sales cost that actually earns it, and payback is measured on gross margin, not revenue.
Revenue policy is fixed and documented before it is tested by anybody else: what is recognized when, how multi-year and usage contracts are treated, and how set-up and implementation are handled. This is the single most common restatement in a technology diligence.
Runway is modeled on committed cost including hiring already agreed, with the trigger points named — the month you must have raised by, and the month you must have decided by, which is earlier.
State net revenue retention with the cohorts to support it. Survive a revenue recognition review. Know the date you have to decide by, not just the date you run out.
Payer mix drifts and nobody notices until the cash does. Reimbursement rates change, denials climb, and days in accounts receivable stretch — but the reporting shows revenue at gross billed rather than expected collection, so the P&L looks stable while collections deteriorate underneath it. In a group built by acquisition, each practice keeps its own systems and chart of accounts, so there is no comparable view across sites and no way to tell which acquisition actually worked.
Revenue is reported at expected collection, not gross charges, with the contractual allowance and denial rate visible and trended. Days in AR by payer, and denials by reason code, because those two together explain most of the cash gap.
Contribution is measured per provider and per site on a consistent basis, with the cost of space, staff and equipment properly attributed, so the comparison across a group is real rather than notional.
For acquisitive groups, integration onto one chart of accounts and one reporting basis is the priority — and then each acquisition is measured against the case that justified it.
See collections deteriorating before the bank balance shows it. Compare providers and sites on the same basis. Tell whether an acquisition delivered what it promised.
Freight is priced off the load board against a rule-of-thumb cost per mile that is a year or two stale. It excludes maintenance escalation on an ageing fleet, the insurance increases that have run ahead of everything else, and the fixed cost that only gets absorbed if the trucks are actually moving. Cost per mile has been climbing while spot rates have not, so the fleet can haul at a loss for months without anyone seeing it. It surfaces as an inability to fund the next replacement cycle — and by then the equipment is older, maintenance is higher, and the hole is feeding itself.
We build a true cost per mile from the ground up and split it into fixed and variable, because utilization — miles per truck per week — is the lever that decides whether the fixed half is ever recovered. Then revenue per total mile against revenue per loaded mile, so deadhead is priced rather than absorbed.
Fuel is run as a program: surcharge mechanics that actually track the index, card controls, fuel tax apportionment, and miles per gallon reported by driver and by unit. Maintenance cost per mile is trended by unit age, which is what turns the replacement decision into arithmetic instead of a feeling.
Asset financing is structured deliberately — buy against lease against lease-purchase, trade cycles, residual risk, and what each does to your covenants. Freight revenue is recognized as the shipment is in transit rather than on delivery, with the period-end accrual that requires, and driver classification is reviewed on both sides of the border before somebody else reviews it.
Price a lane against your own cost rather than the market’s. Know which trucks and which drivers earn their place. Fund the next replacement cycle from a plan instead of a scramble.
The operator manages a consolidated P&L and cannot see the units underneath it, so two or three loss-makers are carried by the strong ones for years. Development agreements get signed against blended averages, build-outs are funded from operating cash, and the liquidity wall arrives at the same moment as an opening deadline whose breach costs territory. Acquisitions get priced off the disclosure document’s published averages without adjusting for which outlets were in the group being measured.
Every unit gets its own profit and loss in the format the franchisor requires, on the mandated chart of accounts, so benchmarking works and reporting obligations are met without a rebuild each period. Four-wall contribution, comparable sales by unit and by vintage, and central cost shown separately so a manager is judged on what they control.
Royalty and advertising fund reporting is made accurate and timely, and audit-ready, because those rights are contractual and the clawbacks are real. New-unit economics are modeled properly — build cost, pre-opening, the ramp curve, cash-on-cash and payback — and tested against the published benchmark cohort rather than the headline average.
The development schedule is funded and phased as a financial obligation with dates, not an ambition. And the entity structure — typically one per unit or territory plus a management company — is consolidated properly, with the intercompany allocations and the separate lender and landlord reporting each one needs.
See every unit on its own numbers. Fund a development schedule you have already modeled. Buy units at a price adjusted for what the published averages actually measured.
Gross margin looks healthy and the business still cannot make payroll. Shipping, payment fees, returns and advertising are never loaded into the margin, and platform-reported return on ad spend double-counts the same order across several channels, so revenue is scaled on a number that is not real. Inventory is bought before it is sold, which means every incremental dollar of growth consumes cash. It arrives as a sentence: we are growing sixty percent and we cannot make payroll.
We build stacked contribution margin — after shipping, after fees, after returns, after advertising — because that is the only margin that tells you whether an order was worth taking. Blended acquisition cost and blended marketing efficiency at the business level, not platform-attributed, so the same sale is counted once.
Profitability is rebuilt per item and per channel with marketplace commissions, fulfilment and storage penalties loaded in, and returns are run as a real line with a reserve against them rather than a surprise. Multi-channel settlement timing is reconciled properly, because each channel recognizes and pays differently.
Then the structural problem: inventory financing. Buying terms, turns, and the working capital facility modeled together, so growth is funded deliberately. Sales tax registration is mapped across every state and province where a threshold has been crossed — and Canada is heavier than most operators expect, because the provincial taxes are not all harmonized and each has its own rules.
Know the contribution on an order before you spend to win it. Fund growth without the inventory cycle eating it. Register where you are actually obliged to, before a jurisdiction finds you.
The board sees a surplus and the organization cannot pay for anything, because most of the money is restricted and the reporting does not separate what is spendable from what is not. Grants are tracked in spreadsheets outside the ledger, so compliance reporting is rebuilt by hand each time and rarely reconciles to the accounts. Program costs are understated because shared overhead is never allocated, which quietly misrepresents the cost of the work to the funders who paid for it.
Restricted and unrestricted are separated in the ledger rather than in a memo, with release from restriction recognized as conditions are actually met. The board sees the unrestricted operating result and the months of unrestricted reserve, which are the two numbers that decide whether the organization can act.
Grants are administered inside the accounting system: budget against actual by grant, by funder and by period, with the compliance reporting produced from the ledger rather than reassembled. Program, administrative and fundraising cost is allocated on a documented, defensible basis, so what a program costs is a fact rather than an argument.
Reserve policy, investment policy and the audit or review file are prepared in advance. Canadian organizations get the treatment their own framework requires, including the election between deferral and restricted-fund accounting and the annual return and disbursement obligations that go with charitable registration — which are materially different from United States practice.
Tell your board what is actually spendable. Report to a funder from the ledger instead of rebuilding it. Say what a program truly costs, with the basis written down.