The assessment surfaced several issues limiting growth and profitability. Three stood out as the highest priority.
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Cash Was at Risk
The A/R aging picture was the most urgent finding. More than 60% of outstanding accounts were past 61 days — and receivables older than 91 days represented 81% of the firm's total cash balance. The average delinquent balance was small, suggesting that lower-value accounts were being left to age rather than actively collected.
This wasn't just a collections problem — it raised questions about the profitability of certain client segments and billing models entirely. The action plan addressed this directly: categorize receivables, write off what was unrecoverable, design a collections process, and move recurring billing to annual cycles that reduce A/R exposure going forward.
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The Financial Picture Was Fragmented
Three separate accounting systems meant no single source of truth. Cost of goods sold was buried inside the general expense ledger, making it impossible to see gross margin by division or client type. Rent and shared overhead weren't fully reflected in the P&L, which meant profitability was being overstated.
Consolidating to a single system, reclassifying pass-through costs as COGS, and allocating overhead to departments would give leadership an accurate picture of what each division was actually contributing — and where pricing or cost structure needed to change.
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The Client Base Had Drifted
Growth through acquisition had expanded the client base, but also blurred the firm's ideal client profile. The result was a mix of legacy accounts, high-value relationships, and lower-margin engagements that looked similar on the surface but performed very differently.
The plan included identifying the ideal client profile, tiering the existing account base, building strategic account plans for the highest-value relationships — and creating a structured exit plan for accounts that weren't a fit.