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CEFO Engagement: Transforming Financial Operations at a Chemical Manufacturing Plant


  1. Introduction

In today’s competive business environment, ensuring optimal financial operations is key for manufacturing companies. This paper recounts an engagement where focused financial intervention transformed the operations of a local chemical manufacturing plant.

  1. Background

When our team first approached this plant, it was clear that legacy systems and practices were impeding progress:

  • The plant was working with an outdated QuickBooks desktop system.
  • Inventory valuation posed challenges, leading to inaccuracies.
  • The high costs of factoring receivables burdened their resources.
  • Financial reporting was relegated to year-end processes and often contained material mistakes.
  • Despite these challenges, there was ambition in the owners’ desire to construct their own plant, requiring intricate financial planning and bank negotiations.

III. Actions Undertaken

Our engagement was rooted in understanding, strategy, and execution:

  • Balance Sheet Evaluation: Our primary step was to assess and cleanse the balance sheet of material misstatements, laying a foundation of trust for future financial negotiations.
  • Strategic Direction: We sought to divert from the high-cost invoice factoring system, aiming for more sustainable and cost-effective financing methods.
  • Projections & Forecasting: Leveraging data, we crafted a 5-year projection model predicting margin enhancements, attributing them to the anticipated efficiencies of the new plant and revised product SOPs.
  • Bank Collaborations: With accurate financial records, we introduced the company to three distinct banks. Their renewed interest was a testament to our strategic recalibrations.
  1. Outcomes Realized

Our methodical approach bore fruit:

  • Robust Financing Secured: 
  • $5 million for the new plant.

o A $750k equipment credit line.

o An adaptive credit line based on monthly accounts receivable and inventory.

o Discontinuation of Factoring: By transitioning from the factoring model, we unlocked substantial cost savings.

  • We were successful in acquiring an IDA grant, promising: o Ten years of tax savings.

o Deductions on mortgage recording tax.

o Sales tax waivers on materials.

  1. Conclusion

This engagement stands as a testament to the transformative power of strategic financial intervention. Through meticulous planning, active collaboration, and strategic foresight, we’ve ushered a local chemical manufacturing plant into a new era of financial and operational prosperity. They continue to prosper with a new equity partner supporting their efforts.

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