Starting situation
The object of the corporate restructuring is a trading company, based in Chicago, which is a distributor in the former NAFTA area of products made by the parent company, an Italian corporation. Operating in electronics and technology for agriculture – c.d. Precision Farming – and active for about ten years, the subsidiary had developed and consolidated its own market in North America; being a lean structure it was composed of operational, commercial, and technical staff, but it lacked a local resource with management skills, and the supervision of the parent company’s sales director and CEO was forcibly limited due to their other commitments at headquarters and in the rest of the world.
The mandate, broad and clear, was to: achieve a balanced economic position; create management control that would allow constant monitoring of results; direct and stimulate the business sector; and identify acquisition opportunities.
The intervention lasted 24 months with 12 missions of 2 weeks each.
Corporate Restructuring: Administration
The turnover over time of different staff (moreover, not specifically skilled in accounting) had stratified an unmanageable situation. Therefore, it was necessary to completely rebuild the administrative-accounting structure.
Although poorly set up and used, fortunately the company adopted a very good management system, Quickbooks (which I recommend to everyone who has companies in the U.S.). Since we were in the imminence of the annual closing, we first checked the adequacy of the inventory and verified all items so that appropriate adjustments and corrections could be made at the upcoming annual closing.
At the same time, a new chart of accounts was created, customized to the concrete operational needs of the business, to start in clarity in the next fiscal year and realize management control directly from accounting, without the need for further processing.
The version, a desktop edition, has been virtualized to gain remote access to the management software so that it can independently access the accounting and give continuity by working remotely from Italy as well.
New features and workflows such as, for example, payroll, previously managed externally, multiple warehouses, previously “managed” with excel sheets, etc., have been created and activated progressively. And all monthly control reports were created. The accounting clerk was, of course, continuously instructed throughout.
In the final part of the intervention, transfer pricing tax documentation was drafted from scratch for the parent company.
Management Control
Reporting
Documents and procedures were created as well as trained staff so that all transactions including purchase orders to the parent company and sales commitments with customers passed through the management system.
This, together with the new chart of accounts system and proper inventory management, has made it possible to have, even remotely, essential management trend data such as, for example: monthly profit and loss reports (directly from accounting with minimal reclassification intervention); statistical sales reports by customer/product; marginality reports by customer and product; etc.
The company is returned to profit After about 1 year.
Transfer and Travel Expenses
One of the specific interventions of the corporate restructuring was the implementation of a fully remote travel authorization and related expense control system. Travel and travel expenses were a substantial item of expenses since it was a trading company. They were originally advanced by employees who, however, had subsequently refused due to the large amount and length in reimbursement; subsequently the company had advanced expense funds that were then deducted from the receipts submitted: however, during the initial audit, a mismatch (and unexplained) advance/reimbursement was noted.
An easy-to-learn app was therefore adopted by which:
- employees submit travel requests (stating reason for travel and expected expense);
- the manager, again via app, approves or rejects the request;
- employees upload expense slips by photographing them with their cell phones or from computers and submit the expense report;
- the manager reviews (possibly asking for explanations always via app) and approves the expense report;
- the approved expense report automatically goes to the administrative clerk who arranges for reimbursement in the next paycheck.
The procedure, after very short learning, has been perfectly acquired and liked by the staff, who now have no problems using their own means of payment, as they know that reimbursement will take place with certainty before they have to pay off their credit cards. In addition, the company has an easily searchable history and statistics on the detailed composition of expenses: by employee, by category (transportation, hotel, restaurant), by reason (customer visit, trade shows, etc.).
Corporate Renovation: Commercial
Last but certainly not least, corporate restructuring has touched the business sector.
To remotely manage sales activity, I immediately adopted a CRM, customizing it according to the company’s needs. After appropriate staff training, it was thus possible to constantly monitor and direct, in spite of the physical distance and time difference, the progress of negotiations and, above all, secure the basis of relations between sales and customers.
This proved particularly useful when I later felt I needed to replace the U.S. sales manager: the handover of ongoing negotiations and-especially-customer relations history to other sales people took place without any problems in only two weeks, despite the fact that the people were one in Wisconsin and one in Alabama (the company was physically unstructured: office and warehouse near Chicago, a technical support in northern Wisconsin, and sales in Alabama and Wisconsin).
Direct activity in the field during the period involved direct participation, alongside salespeople or technicians, in several visits and demonstrations to customers, both established and potential, as well as attendance at 7 trade fairs, including those in which the company participated and those visited for scouting purposes
Business Development
Among the goals of the assignment, the strategic one was related to long-term business development.
Ownership, correctly, believed that business development was a consequence of a more structured local presence, given the importance of product support and the high expectation of the North American consumer.
The first step was to examine a negotiation (ongoing for a year) whose relations had broken down. Having re-established the relationship, visited the company, analyzed the business and balance sheet data, I found numerous reasons that–in my opinion–made the deal not advisable. The reasons behind the conclusions were shared by the ownership, which gave up on pursuing the acquisition (reviewed after 12 months, the choice was confirmed as positive because the company had a substantial drop in business volume).
Later another company was reported for sale that, at first glance, did not seem interesting, but which I decided to visit anyway.
The visit brought out aspects of coincidence between some of the company’s characteristics and the Italian company’s development plans; this, combined with the analysis of P&L’s financial statements for the past few years, made me formulate a positive opinion on the acquisition.
The ownership of the Italian company, agreeing with my findings, decided on the acquisition, which was finalized about 6 months later after formal due diligence by a local firm of accountants.
On the subject of interventions on foreign subsidiaries/partnerships, you might be interested in the article “Business Development +400%”
