Some people feel their business is too small to use the services of a virtual CFO. However, in the case of an electrical contractor client, a virtual CFO service proved to be the perfect fit. We ran our unique Voice of the Team workshop and uncovered a fantastic solution that saved this electrical contracting business time and money. The improved efficiency reduced employee downtime improved their job efficiency and decreased the cost of processing accounts payable with one simple solution. Read on to see how companies of any size benefit from virtual CFO services.
proCFO worked with an electrical contractor with a fleet of ten mobile vans that serviced the entire metropolitan area. Each electrician was responsible for their own work van, including restocking when parts and materials ran out. The company had accounts with all the major electrical wholesalers. It seemed like a great idea to give each team member responsibility for their own van, but our Voice of the Team session revealed some problems with this approach that wasted valuable time and resources.
While the company was on the right track in giving its employees the freedom to stock each van as they saw fit, our Voice of the Team session showed that there weren’t any guidelines for standard stock levels in any van. It turned out that very often the electrician would get to his job and wouldn’t have everything he needed and would have to leave the job and find the nearest wholesaler to get the stock he needed. In fact, we found that some team members had to leave a job to get supplies more than 60% of the time! Since the client quoted jobs based on how long the labour would take, schedules didn’t allow for the extra time to visit the nearest wholesaler for supplies that should have already been available. The leakage of time on jobs ate into productivity and profits.
Results of the problem
In this case, the constant need to re-stock caused many problems for the company. First, employees frequently had to leave a job to get more supplies leaving customers unhappy that the job was taking longer that it should. This had a knock-on effect to the next scheduled job because the originally promised arrival time couldn’t be met, and occasionally the last job of the day would be so late it needed to be rescheduled to a different day! But the customer service problems were only part of it. There was also the wasted resources in fuel plus wear and tear on the fleet of vans from all the extra trips to the wholesalers.
Compounding the customer services issues was the fact that each visit to the wholesaler resulted in a small invoice to the accounts payable department. The accounts department took several hours each week just to process and reconcile all the supplier invoices.
Finding a solution
We worked with the client to create a solution that saved time, eliminated the cost of holding stock and also increased the number of jobs completed each week.
Firstly, we did an exercise to determine the optimum level of supplies for each van that would last the average week. Then we negotiated an exclusive supply agreement with one wholesaler who agreed to supply the standard stock list for each van on consignment – completely eliminating the cost of holding stock in the vans. Each van was fully re-stocked to the standard level each week and the supplier provided one invoice a week for the materials replenished.
The benefits of this change for the client were significant. Firstly, they finished jobs faster and that meant they were able to complete an average of 10% more jobs over the course of week. Profits improved from increased productivity. Cash flow improved from the reduction in stock. Customer satisfaction improved because jobs were completed without delay. Employee satisfaction improved because they were able to get on with the job and didn’t have to concern themselves with decisions about how much stock to carry in their van. Lastly, the accounts payable department saved 2 hours each week not having to locate and reconcile dozens of wholesaler invoices.
The Voice Of The Team process that proCFO uses is very effective at uncovering solutions to business problems that have sometimes baffled the owner for years. The business owner doesn’t have to have the answers to all the business problems. They just need to provide the forum and an experienced facilitator to get the sort of results that proCFO achieved for this client. If you want to know more about how virtual CFO can help your business, get in touch.