QUICK SNAPSHOT
Industry: Manufacturing | Services: Fractional CFO, Financial Health Check, Financial Reporting and Analysis
THE SITUATION
When Lantern Partners was engaged, this manufacturing business had just parted ways with their finance manager. They had lost confidence in the accuracy of the information being produced and weren’t getting what they needed to run the business well. The numbers existed – they just couldn’t be trusted.
When we went under the hood, a few things became apparent quickly. The business was producing too many different types of data in too many different ways, none of it focused on what actually mattered. A lot of the work was being done in Excel rather than inside their accounting system, NetSuite, creating inconsistencies throughout.
The most significant issue was the balance sheet. It had never been properly validated. Inventory was recorded at $5 million. The actual figure was $3.5 million – a $1.5 million discrepancy caused by journals being booked incorrectly to the general ledger and never reversing. The previous accountant simply hadn’t understood what they were doing in the system.
There was also a relationship dimension to navigate. The founder was initially skeptical about bringing in external finance support. His daughter who had recently returned from maternity leave to take on responsibility for finance, governance and strategy, was the opposite – immediately engaged and keen for proper financial oversight, particularly after the departure of the controller. She knew the business well but didn’t have a finance background, and she wanted someone who could bring that professional rigour in.
WHAT WE IMPLEMENTED
We started with a full reconciliation of the balance sheet – going account by account, flushing out the supporting documents, validating what was right and what wasn’t. For inventory specifically, that meant tying the general ledger figures back to a physical listing of every individual item, then implementing a far more rigorous cycle counting process going forward.
Reporting was overhauled. Simplified, made readable and relevant, and enriched with analysis and commentary rather than just more data. The focus became what was important, not everything.
The relationship with the founder was handled through the work itself. Lantern Partners worked closely with the management team, and as the founder saw the output and witnessed how reporting was improving at board level, his confidence grew naturally. Show don’t tell.
THE IMPACT
The business now has genuine confidence in its numbers. Leadership understands not just the results but the drivers behind them – what is actually causing performance to move.
A detailed margin analysis was a particular turning point. It revealed how margin was being eroded each month in ways that, previously, would have taken several months to even identify. The business can now see those trends and project three to six months forward.
The shift in perspective has been meaningful: from looking through the rear-view mirror – understanding what happened months ago through an imperfect lens – to looking through the front windscreen with a clearer view of what is coming. Budgeting for the current year is significantly better informed as a result.
TECH AND TEAM
NetSuite (existing system, reconfigured and properly utilised). Full balance sheet reconciliation and inventory cycle counting implemented.
SERVICES PROVIDED
Initial Financial Health Check. Ongoing Fractional CFO support. Financial reporting redesign and analysis. Margin and performance analysis. Balance sheet reconciliation.