How a Hypergrowth CPG Company Reduced Aged Receivables by 80% with a Simplified Accounting Function

CLIENT BACKGROUND

Company: Consumer Packaged Goods (CPG) company
Industry: Food
Area of Operations: US nationwide
Revenue: $5 million (2021)

Overview

As a hypergrowth CPG company started to sell its products across big box retail stores, it saw a manifold increase of its customer base. However, tracking customer data and accounts receivable (AR) was a challenge. Additionally, its parent company was providing funding that was used almost immediately to pay for outstanding payables, as customer payments weren’t coming in quick enough. The business needed to streamline its accounting functions to get visibility and control over its AR. The company partnered with Sikich’s Managed Accounting team to keep on top of collection effectiveness and ensure timely payments.

The Goal

The company’s accounting function was fraught with operational inefficiencies given the lack of invoicing and collection systems. Increasing customer volume combined with unique customer requirements for invoice submission made it difficult to monitor collections and get insight into its overdue invoices. At the same time, a lack of accounting expertise impeded the AR collection process.

Therefore, the goal was to leverage the expertise of accounting and financial experts to keep track of the cash that the customers owed and to ensure customer payments were collected more consistently.

The Solution: Restructuring the Invoice Submission and Follow-Up Process

The Sikich Managed Accounting team’s comprehensive solution encompassed a wide range of services—from assessment to implementation to support. Our team of experts worked with the partner to build consistency in invoice submission and document action items while ensuring detailed follow-ups for AR. The solution included:

• Assessing the current state of AR
• Identifying open receivables and gaps in the collection process
• Categorizing AR
• Reconciling AR aging on a monthly basis
• Implementing consistent follow-ups with outstanding customer service

Business Impact: Reduced Aged Receivables and boosted customer experience

The Sikich Managed Accounting team’s holistic AR management solution enabled the client to implement the right processes and systems for managing AR. This helped:

• Reduce aged receivables by 80%
• Improve internal control with documented processes
• Improve the audit process
• Enhance the customer’s experience