Your Accounting and Finance Provider Might be the Key to Resiliency

According to the World Economic Forum, we’re in the age of disruption. For example, in 2023 alone, businesses were navigating rapid-fire obstacles ranging from increasing interest rates and bank failures to ESG-driven infrastructure disruption.

This volatility has seemed to spark an avalanche that continues to batter businesses with increasing uncertainty fueled by inflation, social justice advocacy, and worsening climate change–along with increasing pressure to take action, there are labor shortages, DEI initiatives, and many other internal and external pressures.

Now, more than ever before–the key to survival is building resiliency.

Companies that have fared the best all have one thing in common–they’re proactive. These companies are engineering processes and workflows with the agility to adapt. They’re building flexibility into their workforce. They’re adding technology and exploring new business models. And they’re working to strengthen their balance sheets.

The bottom line is that even highly successful businesses are susceptible to failure amid the constant state of fluctuation.

Profitable Doesn’t Mean Resilient

An established marketing agency with a healthy bottom line brought in the team at kept.pro to provide oversight for its internal accounting, and as a result they made several strategic financial moves that ultimately helped them weather the radical shift in business during and after the COVID-19 pandemic.

The client had been operating profitability for a number of years. They had a national presence with offices on both US coasts. They also had a line of credit which was regularly renewed. To many, they were fine. But there’s an important distinction–profitable doesn’t necessarily mean resilient. They were fine now, but could they weather the next storm–or the one after that?

Building resilience is the key to surviving and thriving in today’s economic landscape. Specifically, organization’s need to anticipate, adapt, and respond quickly as conditions change. This applies to more than sales–it applies to all facets of business.

For example, in marketing, agencies have had to adapt to new technologies like generative artificial intelligence and machine learning algorithms that provide real-time data availability but also enable automation that has dramatically impacted service delivery.

Those agencies that have been able to adapt to digital, and then omnichannel approaches, have earned their marketshare while those who continue to pedal outdated methods continue to grow obsolete.

Outsourcing for Oversight Turns Into a Big Value-Add

This agency was doing well and when they sought out a partnership with kept.pro, they were simply looking for a level of oversight and accountability for their internal accounting staff. Through our expertise, our team ended up providing much more.

We advised our client to collateralize their receivables under an asset-based lending package of similar size and cost to their previous credit line.

Additionally, we advised on key areas like:

• Utilization Reporting
• Job Costing
• Industry Benchmarking for Profitability & Liquidity

Re-Engineering Finance for Strength and Resiliency

Rather than relying on a single line of credit, we helped the agency take a more holistic approach using a lower-risk credit approach, increased labor utilization, and improved reporting to keep everything in good shape so that if the agency needs to execute a strategic pivot–they can do so.

The asset-based line needed no personal guarantee and had fewer covenants than the previous arrangement. In addition to gaining flexibility to fund unknowns, this move also reduced the majority shareholder’s personal exposure.

Additionally, the revised utilization reporting resulted in the divesture or repricing of key clients and the reallocation of idle labor that both significantly improved profitability. With more wiggle room, potential downturns due to market volatility will hurt less–or at least provide a little more runway to adapt.

The benchmarking of key performance indicators like profitability and liquidity informed new policy that eventually improved balance sheet characteristics. As a result, the agency was better positioned to weather the initial COVID-19 years with confidence and will remain strong as they contend with new challenges in the future.

More than a Provider–We’re an Ally

Your accounting and finance provider can offer more than clean books. At kept.pro, we provide a team-based approach that addresses finance from both a tactical and a strategic approach.

Learn more about how our team can help your organization become more resilient.