Before DLC

• Lack of in-house resources and expertise
• Difficulty executing key process improvements

After DLC

• Cost savings & increased cash flow
• Real-time visibility
• Streamlined compliance

Project Overview

A leading global contract research, development, and manufacturing organization engaged DLC to manage the financial close process, tax compliance, and year-end activities while identifying and implementing process improvements.

Business Challenge

The sudden departure of the client’s controller left the company without critical financial oversight during a pivotal time, including the ongoing annual audit, tax compliance, and year-end activities.

In addition, coordination was further complicated by the need to work across time zones and cultural differences with audit and tax firms based outside of the US.

Approach

To address the client’s financial and operational challenges, our team developed a comprehensive approach to enhance key processes across the organization.

Our consultants then worked closely with the client to implement the following solutions:

• Financial Close Process Improvement: Formalized the monthly close process for six entities, including creating a monthly close checklist and timeline, resulting in a consistent five-day close process. Implemented a standard review process for balance sheet reconciliations, ensuring all accounts were accurately reconciled and open items were resolved promptly.
• Business Practice Enhancements: Collaborated with key stakeholders to identify and recover over $200,000 in sales tax exemptions and ensure future compliance with applicable tax laws. Provided guidance on ASC 606 revenue recognition for complex transactions, ensuring proper revenue reporting for U.S. operations.
• Accounts Receivable and Inventory Management: Revamped the company’s AR and inventory management processes, leading to a 10+ day improvement in Days Sales Outstanding (DSO) and stabilized financial reporting through better reserve management.
• Fixed Asset and Property Tax Review: Led a fixed asset cleanup initiative, resulting in $60,000+ in business property tax reductions and $20,000 savings in business property insurance.
• Manufacturing Cost Management: Developed a workaround to accurately cost and capitalize manufacturing overhead (MOH) in inventory, addressing a critical gap in manufacturing costing and ensuring GAAP compliance.
• ERP Process Improvement: Enhanced end-to-end processes for client pass-through transactions, leading to $300,000+ in additional client billing and a streamlined inventory valuation.
• Risk Management: Facilitated the annual insurance renewal process and established a recurring safety and worker’s compensation review process, promoting best practices and visibility into risk management.

Results

DLC’s improvements not only stabilized the client’s operations but also laid the groundwork for long-term financial health, benefiting multiple departments and enhancing overall company performance.

DLC’s work also provided the client with the following benefits:

• Cost Savings: The project generated significant cost savings, including $200,000+ in sales tax recoveries, $60,000+ in property tax reductions, and $20,000 in insurance savings.
• Efficiency Gains: The formalized monthly close process reduced close time from 8 days to 5, improving financial reporting accuracy and consistency.
• Increased Cash Flow: Improved AR management reduced DSO by 10+ days, enhancing cash flow and financial stability.
• Compliance and Reporting: Proper revenue recognition and inventory management ensured compliance with GAAP, reducing the risk of financial misstatements and enhancing the reliability of financial reports.
• Scalability: The implemented solutions provided a scalable framework for future growth, supporting the client’s continued expansion and operational efficiency.