An uphill climb
Applied Virtual Vision, Inc. (AVV) is an online provider of CRM applications to auto dealers.  The company grew quickly to the point where its limit of sophistication and discipline in financial matters was hindering its progress.

For example, AVV had no budgets within which to operate and no method of understanding and controlling cash flow.  Furthermore, their untimely, inaccurate and obtuse financial statements left them without a way to assess performance of their business segments.

As a result, receivables grew large and choked the company's cash flow.  Management had no useful metrics to hold team members accountable.  And strategic issues languished because management was busy attending to financial distractions.

Dan Vogel, CEO of AVV, recognized this problem; but his only resource for financial management was Gigi, who invoiced customers and paid bills.  Gigi was diligent though lacked expertise to convert transactional data into meaningful, actionable information.Likewise, AVV’s external CPA provided good tax advice but wasn’t in a position to deliver much financial analysis and insight.  The company’s banker recommended that AVV hire a CFO. However, the company couldn't afford a full-time financial executive, couldn't keep one fully utilized and didn't want to manage a non-core function internally.

Boosting horsepower
AVV’s attorney suggested to Vogel he co-source his financial function with Beanstalk.  Soon after their first meeting, Vogel hired Beanstalk to deliver finance & accounting functionality to AVV on an ongoing basis.

First, Beanstalk assessed AVV’s financial situation, identifying areas needing improvement and recommending modifications. Vogel accepted the suggestions, so Beanstalk:

Keeping on track
Beanstalk then began to provide ongoing bookkeeping & accounting functionality.  It supervised Gigi as she invoiced customers, collected receivables, paid bills and tracked employee time.  In addition, Beanstalk coordinated payroll processing through ADP, reconciled bank and credit card accounts and closed AVV’s books to ensure accurate accounting treatment of all transactions & activity.  Moreover, Beanstalk helped AVV manage its cash.

Immediately after each month-end, Beanstalk delivered Vogel a Flash Report of certain early indicators.  Soon thereafter, it provided him a Dashboard Report summarizing, in graphical form, actual performance vs. targets on key metrics over time (e.g., productivity, profitability, efficiency, solvency, leverage, liquidity and outlook).  Accompanying the Dashboard were detailed statements comparing results to goals, prior periods and peer performance.

Beanstalk led monthly meetings with client management to present and discuss variances from budget, analysis of strong and weak components, and recommended actions to enhance profitability and growth.It presented a summarized version to AVV’s entire staff.  Once the results were understood and actions plans agreed, Beanstalk led the implementation thereof.

At each year-end, Beanstalk coordinated AVV’s Tax & Audit work.It also led management through the re-budgeting for the following year.

Shifting to high gear
When AVV needed funding to accelerate, Beanstalk introduced Vogel to banks and investors. They chose one of each, and Beanstalk negotiated terms and secured the capital.  Then, the firm tracked AVV’s performance vs. covenants and communicated financial results to its stakeholders.  Also, Beanstalk assisted Vogel in setting up his board and introduced him to peers who became directors.

As needed, Beanstalk provided decision support and transaction management to Vogel.  Specifically, the firm analyzed targets for AVV to acquire. Working with the company’s attorney, Beanstalk performed due diligence and structured terms of the deal.Once the acquisition was executed, the firm helped assimilate operations of the acquiree into AVV.

The finish line
When AVV grew to 70 employees, the owners decided to exit.  Beanstalk helped to identify potential buyers and negotiate terms of a deal to sell AVV to Autobytel for roughly $10 million.Again, the firm coordinated with AVV’s attorney and tax accountant.Together, the team conducted inbound due-diligence and assisted in closing the transaction and securing proceeds.

Over the course of their relationship, Beanstalk helped AVV quadruple in size and reap a 300% return on investment. Looking back, Vogel cited several benefits to co-sourcing his finance and accounting function with Beanstalk: