Interim CFO and Controller Services for Distressed Businesses

Nothing useful happens in a distressed company until someone knows the real cash position. That means bank balances reconciled today, not the book balance from a ledger that is three months behind; every outstanding check and pending ACH listed; receivables aged with a realistic view of which ones will be paid and when; payables aged by vendor with the critical ones flagged; and payroll, taxes, and debt service laid out by date. Most owners have this information spread across their head, their bookkeeper, and a stack of mail. Assembling it is the first job.

We take control of cash in the first days: a daily cash report, dual approval on disbursements, a stop on automatic payments that were set up in better times, and a single list of what is due, to whom, and what happens if it is not paid. This is not about distrust. It is about making sure that every dollar leaving the company is a decision someone made on purpose.

The first week's findings are delivered plainly. Owners in distress have usually been told what they want to hear for a while, and it has not helped. The findings include what we think the company is worth fighting for, what has to change immediately, and what we do not yet know. The last part matters, because a plan built on a guess about receivables is a plan that fails in week three.

In a healthy company the 13-week forecast is a management tool. In a distressed company it is the constitution. It lists every expected receipt by customer and week, every disbursement by vendor, payroll, tax, and lender, and the resulting cash balance at the end of each week. It shows the week the money runs out, which is the only date that matters, and it shows what has to change to move that date.

The forecast is rebuilt every week with actuals against the prior forecast, and the variances get explained. When collections come in $60,000 light, the forecast shows which payments move, and the vendor calls happen that afternoon rather than after the check bounces. The bank receives the same forecast, which is how the bank starts to believe the numbers again: not because the numbers are good, but because they turn out to be accurate.

Every decision in a turnaround, from which vendor to pay to whether to take the big order, gets tested against this document first. Optimism is not an input. Neither is despair. The forecast is a neutral instrument, and it is often the first document in months that shows the owner a path rather than a wall.

The date the cash runs out is the only date that matters. Everything else is a plan to move it.

You cannot pay everyone, so the question is who, and the answer is not whoever is yelling loudest. Vendors get sorted by what happens if they stop: the supplier without whom production halts, the landlord, the payroll provider, the insurance carrier, the taxing authorities, and the utility are in one group. The vendor with a large balance and no hold over operations is in another. The list is written down, reviewed weekly, and followed.

Each critical vendor gets a call, from finance and not from the owner, with a specific proposal: a payment schedule, a partial payment against current shipments, or a plan for the arrears. Vendors accept realistic plans far more often than owners expect, because a customer with a plan is worth more than a customer in bankruptcy. What they do not accept is a fourth broken promise. We do not make promises the forecast cannot keep.

Where a vendor holds lien rights or a personal guaranty, the conversation is coordinated with counsel. Where a vendor holds neither, the conversation is still respectful. They will remember how they were treated when the business recovers. A vendor list built in a crisis, with a named contact and an agreed plan next to each name, is also the first piece of the recovered company's accounts payable process, and it usually outlives the crisis.

A bank that has issued a reservation of rights letter or moved the loan to its special assets group wants two things: to know the truth about the collateral and the cash, and to see a credible path to getting repaid. What it has been receiving is late financial statements, covenant calculations that arrived after the default, and phone calls from an owner who is not sure of the numbers. The relationship recovers when the reporting becomes accurate and on time, whatever it says.

We take over lender communication: the weekly cash forecast with variances, a borrowing base certificate the bank can verify, covenant calculations before the test date rather than after, and a written turnaround plan with milestones the bank can hold you to. Where forbearance is needed, we prepare the financial case and the reporting package that supports it and work alongside your counsel on the terms. Where the bank has stopped funding, the forecast shows exactly what the company needs, when, and what it can offer in return.

Banks lend to people they believe. Belief is rebuilt one accurate forecast at a time, and there is no shortcut. The reporting package also positions the company for whatever comes next: a forbearance agreement, a refinance with a lender who has read six months of accurate forecasts, or, if it comes to it, the cash collateral budget a court will need to see.

Sometimes the honest forecast shows that the business cannot be fixed outside of a court process: the debt is too large for the cash flow, a contract needs to be rejected, or a creditor is about to take an action that would end the company. The decision belongs to you and your counsel. The financial operation of the case, if it comes to that, is where we have direct experience: debtor-in-possession budgets and variance reporting, monthly operating reports, cash collateral schedules, first-day motion support, and the reporting the court and the United States Trustee expect on time.

A company in Chapter 11 still has to make payroll, buy material, and collect receivables while every dollar is being watched by a judge, a creditors' committee, and a lender. The finance function has to run the business and the case at the same time. Our principal has done this as CFO of a multi-entity construction and field-services organization and understands what the court, the committee, and the lender each need to see and when.

We do not offer legal advice, and we do not replace bankruptcy counsel. We make sure that when counsel asks for a number, it is right, it is on time, and it reconciles. The court process rewards the same discipline as the bank relationship: accurate numbers, delivered on schedule, with variances explained before anyone has to ask.

A turnaround is finished when the company can produce its own numbers, keep its own promises, and fund its own operations without an interim executive in the room. Getting there means the processes built in the crisis, meaning the daily cash report, the weekly forecast, the vendor list, the lender package, and the monthly close, are documented and running in the hands of your people or of the controller we help you hire.

Along the way, the reporting that was built for survival becomes the reporting that runs the recovered company: unit-level margins that showed which operations to keep, the customer analysis that showed which accounts were funding the losses, and the cost structure that was reset to the business you actually have. The company that emerges is usually smaller and always better informed.

Fix it. Run it. Document it. Hand it off. In a distressed engagement those four steps are not a slogan. They are the sequence. The handoff is planned from the first week, because an interim executive who becomes permanent by default is a sign the business has not been stabilized, only propped up. Our job is to leave.