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Jun 28
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Gene Gregory

By Uncategorized

Gene Gregory is a director of Warren Whitney, working with clients requiring senior level operations, accounting, or financial management.  He brings over 30 years of progressive experience helping organizations establish and meet growth and profitability through active and ongoing management decision making.

Management Experience:

Gene generally serves clients in the role of CFO or COO. He brings to clients a creative and enthusiastic, but studied approach to problem solving and broad, multidisciplined experience in effectively managing numerous projects and people to meet organizational goals.

Gene has served Warren Whitney for over twelve years, starting originally in 1993, with a break in service for a successful 11-year entrepreneurial stint as an owner of a specialized home medical equipment company. Returning in 2007, Gene has continued to serve not-for-profit clients with a variety of social enterprises and missions and business clients in a variety of industries.  Clients have included:

  • A local mental health and educational services organization,
  • A multi-location health and fitness business,
  • A regional family-owned quarry operation,
  • A national membership organization,
  • A local home health agency,
  • A regional computer value-added reseller,
  • A local family-owned heavy equipment service center,
  • A local home health agency,
  • A local performing arts organization.

 

Gene assists clients by identifying the organization’s strengths and weaknesses in operational and financial systems and processes, helping clients leverage strengths and correct deficiencies. Because of his broad functional experience, he favors comprehensive management to achieve an organization’s goals and can perform as a leader or management team member.

From 1996 to 2006, he was the senior vice president and part owner of Medical Modalities Inc. (MMI), a North Carolina based home medical equipment dealer. During that tenure with MMI, he managed operational and financial functions of the company, leading the company from its small business roots to regional recognition and success. He formalized organization and processes as the staff grew in number from eight to 55. Working with his partner, the company’s founder and president, Gene helped MMI open new product markets in profitable niches. Sales grew 800% over 10 years and the company’s market expanded from one to five states. The partners sold the company to a venture capital group with the financial capabilities to launch a national expansion, thus meeting a goal set when Gene joined MMI.

Prior to Gene’s earlier years with Warren Whitney, he was a senior manager for McGladrey & Pullen, a national public accounting and consulting firm. He coordinated financial consulting, auditing, and accounting services to manufacturing, distribution, and service companies, as well as to a variety of not-for-profit organizations including colleges, trade associations, and charitable entities. Perhaps uniquely, his experience with non-taxable entities added a fundamental knowledge of fund accounting and government reporting requirements to his other business skill sets. Before joining McGladrey & Pullen, Gene was an instructor of accounting and economics at Averett College.

Education and Professional Associations:

Gene holds an MBA from the University of North Carolina at Greensboro and a BA in Economics from Clemson University. He is licensed as a Certified Public Accountant by the Commonwealth of Virginia.  He is a past member of the American Institute of Certified Public Accountants, the Virginia Society of Certified Public Accountants, the North Carolina Association of Medical Equipment Suppliers and the Virginia Government Finance Officers Association.

Contact Gene by E-Mail

Jun 28
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Charles “Rique” Flato V

By Uncategorized

Charles “Rique” Flato is a director of Warren Whitney. Rique generally serves his clients in the role of controller or CFO. He has a consistent record with various companies, utilizing financial expertise to improve accounting practices and turn problematic business conditions into profitable operations. The primary businesses served include construction, retail, real estate, and service organizations.

Management Experience:

Rique has broad experience in financial reporting in accordance with GAAP. He has been successful in developing appropriate internal accounting control systems and is also skilled at introducing and managing change while maintaining organizational relationships and management processes.

Prior to joining Warren Whitney, Rique was the controller for Fountainhead Development Group, a real estate development company. Rique played an integral role in helping to generate historic tax credits on development projects that the company owns and manages in Shockoe Slip, Shockoe Bottom, and Manchester areas of Richmond. Before joining Fountainhead, Rique was an independent business consultant to small- and medium-sized businesses. Services provided were similar to controllership and consulting services provided under the current Warren Whitney business model.

Rique also served as vice president and corporate treasurer for Fas Mart Convenience Stores, which operated 160 convenience stores in three states with annual revenues of approximately $200 million and 500 employees. During his tenure at Fas Mart, Rique was in charge of managing the accounting and financial record keeping with respect to the operating company, its affiliates, and related entities, including financial planning, budgeting, and profitability planning. In addition, he was responsible for the management of financial accounting systems and implementation of policies and procedures with respect to the control of cash and other elements of loss control. Responsibilities also included managing deposit and credit relationships with banks and for cash management and treasury operations.

Prior to joining Fas Mart, Rique was treasurer of Brooks Transfer and Storage Company and supervisor at McGladrey and Pullen, a national public accounting and consulting firm. During his five-year tenure at McGladrey, Rique supervised multiple audit teams led by senior auditors, revised audit documents to ensure proper compliance with GAAP, trained staff members in auditing procedures, and prepared and reviewed corporate, individual, proprietor, Sub-chapter S, and not-for-profit tax returns.

 

Education and Professional Associations:

Rique holds a BBA in Accounting from Sam Houston State University in Texas. Rique has served on the Board of Directors of Ducks Unlimited as treasurer, is a member of the West Richmond Businessman’s Association, Willow Oaks Country Club and is involved in many sports organizations in the Richmond community.

 

Jun 28
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Cyndy A.G. Lowery

By Uncategorized

Cyndy Lowery is a director and an owner of Warren Whitney. Primarily working with clients requiring accounting and financial management, she offers more than 25 years of experience in both public accounting and private industry.

Management Experience:

Cyndy generally takes the role of CFO with her clients. She has helped her clients establish a budgeting process and evaluate and improve operating strategies including changes in procedures and policies both to improve the quality of customer service and to reduce overall cost. She has developed financial information packages and met with lenders on her clients’ behalf to obtain favorable financing. Additionally, she routinely meets with her clients’ other professional advisors, including attorneys, accountants, consultants, and bankers, to ensure that the appropriate information is communicated.

Cyndy works with her clients to design and implement the appropriate systems of internal controls. She then monitors the systems to ensure that they meet the needs of the client without creating unnecessary work or paper. She works to ensure the timely and accurate reporting of internal management information as well as monthly financial statements. She also works closely with the management team, helping them interpret the numbers.

Forensics Experience:

Cyndy’s forensics experience began with the charge to recreate records destroyed by a flood in the 1980’s and has developed over the years as she has served clients in the midst of legal battles and recovering from employee fraud and embezzlement. She uses her experience from having installed dozens of accounting systems and creating systems of internal controls to detect and correct errors and protect the integrity of the financial records.

Prior to joining Warren Whitney, Cyndy worked in both public accounting with Deloitte & Touche where she became a Certified Public Accountant, and in private industry.

Education and Professional Associations:

Cyndy attended Virginia Tech for two years where she was a Marshall Hahn merit scholar, and she holds a BS in Accounting from Virginia Commonwealth University. She also has a Masters of Divinity in Biblical Counseling from Southeastern Baptist Theological Seminary, and is pursuing a Ph.D. in Biblical Counseling from Southern Baptist Theological Seminary. For many years she served on the board of the Hanover Business Council and the Cold Harbor Elementary School PTA, and she currently serves her church in the role of treasurer .

Contact Cyndy by E-Mail

Jun 28
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Scott R. Warren

By Uncategorized

Scott Warren is a co-founder and director of Warren Whitney and a senior member of the management teams of a select number of the firm’s clients. Working primarily with clients requiring senior level business, financial management, or systems expertise, he brings over 20 years of experience in helping organizations manage change.

Management Experience:

Scott generally serves Warren Whitney’s clients in the role of CFO or assistant to the president. As CFO, he is responsible for banking relations, financial systems, and general management decisions made for the company. As assistant to the president, his responsibilities include working with the management team to define and implement corporate strategies.

The work Scott has done with one of his clients illustrates the scope of his roles. When he started working with the company, he implemented a job cost accounting system and worked with the managers to help them understand the effect that their project management efforts had on the profitability of each job and, ultimately, on the profits of the company.

Scott has helped the same company more than double in size in two years. In addition to natural growth, the company has acquired other companies and has started a subsidiary. Scott was responsible for the financial analysis of these strategic business decisions and for working with the company’s attorney, tax advisor, and banker to complete the transactions. He then worked to integrate the new entities into the culture and systems of the company.

Scott has been instrumental in redesigning and upgrading many clients’ information systems. He was involved in defining, acquiring, developing, and installing systems ranging in scope from general accounting applications to sophisticated cost accounting, CAM, and management information systems. He helps clients define and implement systems that meet their management needs, not just their data needs, and he has the ability to train an organization’s personnel and explain the processes to them in a way they can understand.

Prior to forming Warren Whitney, Scott was the partner in charge of the Virginia consulting department for McGladrey & Pullen, a national accounting and consulting firm. He expanded the concentration of his regional consulting department from primarily data processing consulting to include strategic planning, financial management, marketing, human resources, telecommunications, and disaster recovery planning. The expansion tripled the size of the practice and broadened the service area to include the Shenandoah Valley, Tidewater, and Northern Virginia. As partner in charge of practice development for the Richmond office, Scott was responsible for marketing all the services offered by McGladrey & Pullen, including audit and tax, and for coordinating the use of regional and national consulting services.

Scott has worked in many different industries, including construction, manufacturing, marketing, distribution, real estate, not-for-profit, and healthcare. He consistently uses his broad range of experience to develop creative ideas and solutions for his clients.

Education and Professional Associations:

Scott earned an MBA from the University of North Carolina at Chapel Hill and a BS in Business from the University of Delaware. He holds a CPA Certificate in Virginia and is a member of the American Institute of Certified Public Accountants and the Virginia Society of Certified Public Accountants. He serves on the board of the Greater Richmond Chamber of Commerce, Richmond History Center, and Willow Oaks Country Club, and is a past president of the Bull & Bear Club. Scott is also active in the Association for Corporate Growth.

Contact Scott by E-Mail

Nov 20
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Financing Alternatives

By Family Businesses, Finance & Accounting

Stepahnie

Contributor: Stephanie Ford

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Imagine this…. Your company is growing… you need capital to continue to expand… however, you’ve been turned down by three banks in a row.  Yikes!   Has this ever happened to you?

In my 12 years of experience as a commercial banker, the better prepared a business owner was for the request, the more likely they would receive financing.  Owners that came to me with a binder chocked full of financial statements, detailed reports, and maybe even a strategic business plan were impressive. Entrepreneurs that provided few concrete materials and simply shared a stream of consciousness of their ideas gave me little to work with.

How to position yourself to get funding for your business is critical in today’s tight credit markets. Preparing a request for financing should be taken seriously, and good preparation will yield better results. Here is a framework for thinking about your approach.

1.  Think hard about why you need to borrow.  Specifically identify the purpose and develop a business case for the need to borrow and repayment.  The best way to do this is to prepare monthly cash flow projections of sources and uses of cash.  This prediction of needs and surplus will help to identify how much you need to borrow and how quickly your business can repay the loan.  The purpose of your borrowing need will also help to determine what type of loan is best for your company, such as a revolving line of credit for working capital needs or a term loan for permanent improvements to real estate or equipment purchases.

2.  The more complete a package of information you can provide to the bank, the better.  If you have a business plan, share the entire plan with your banker.  In addition to 3 years of financial statements and tax returns, also include any other key reports that you use to run your business.  This may seem excessive, but even routine reports such as an accounts receivable aging and accounts payable aging aid in giving the banker insight to your customer management and diversification.  Be sure to share any key metrics that are valid for your industry, such as inventory turns, job costing reports, days to market, customer returns, utilization rates, etc.   Providing organizational charts and competitive industry details is also valuable.

3.  Just as important as preparing your loan request package, give serious evaluation to the bank and banker you want to work with.  In today’s market, financial institutions vary widely.  Consider what is important to you: branch convenience, technology and services, commercial focus and approval process, legal lending limit, ability for the bank to grow with you over time, etc.  Think about whether these needs are best met by working with a large national institution, a strong regional player, or a small community bank.  Once you have a sense of the type of institution that would best fit your business, research to determine the best contact at that bank for you.  Most commercial banks have several bankers in one department with a manager above them. Finding the right person and personality for you to build a long-lasting relationship with can make all the difference in the growth of your business over time, particularly through the tough years.

 

The classic 5 C’s of Credit have been an excellent guide for many over the years on the borrowing process. If you can imagine yourself in the shoes of the banker, thinking through their concerns, it will help you prepare your request and business case.

Character

During the entire request process, the banker is also evaluating your character to try to determine if you would be a trustworthy borrower.  Be sure to have your personal finances in order as well.  Complete a detailed personal financial statement (any bank can provide you their form), know your credit score, and clear up any incorrect items with the credit bureaus. Provide background about your relevant experience and track record of profitability and repayment ability. This can also include any prior company experiences. Most of all, be forthcoming with both the good and any downside to your experience.  Bankers never like surprises.

Capacity

You should know that the bank will be examining your financial statements and then calculating certain financial ratios. Two of the most critical ratios are leverage and debt service coverage. Leverage is measured by debt/net worth and the lower the better.  While the target varies per industry, a good guideline is under 2:1. Cashflow is a measure of income/debt payments or more specifically EBITDA/(prior year’s current maturities of long term debt + interest expense).  It is essential that this ratio exceeds 1.2:1.0, no matter your industry.  The higher the better as you want to show the bank you have sufficient cashflow to service your debt along with a cushion for good margin.

The key takeaway: it is good if you are able to calculate these in advance so that you can anticipate how favorably your numbers will be viewed in the eyes of the bank.

Capital

This refers to your net worth or equity value in the businesswhich is determined by the value of your assets less the amount of your liabilities (how much youown minus how much you owe).   The higher your net worth, clearly the better.

Note: a negative net worth is a red flag to the bank and a sign you may still be at the level of borrowing from friends and family or other non-traditional sources such as factoring receivables or venture funding.

Collateral

After the bank examines your cash flow repayment ability, they then look to collateral.  Consider your business assets and personal assets you have available to offer. This may include real estate, investments, accounts receivable, inventory, equipment, and even your personal residences.  How large and liquid are they in relation to the loan you are requesting?  The reality is, they should be larger than your loan request as banks discount the value of most assets and only lend 40%-80% against most assets.

Conditions

If you have encountered any difficult spots in your business in the past few years, address them up front.  Prepare to tell the story of your business and how you worked through the challenging times. Different banks may also have different tolerances for different industries.  This may be based on the performance of the industry overall, the bank’s experience in that industry or their amount of current exposure to that industry.  Ask about their preferences to find a better match and increase your success rate. Remember, no industry was untouched in the recent great recession.  How you faced those challenging times will be insightful.

Seeking financing in today’s market is complex.  To put your best foot forward, much preparation is needed.  Seek the guidance of an advisor(s) for input into your request and positioning.  Your CPA, attorney or Warren Whitney consultant can be a valuable resource in this process.

 

Nov 20
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Key Considerations for Nonprofit Mergers

By Nonprofit, Strategy

Cropped Katherine websize

Contributor: Katherine Whitney

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Many boards and nonprofit CEOs are quick to reel back at the mention of a possible merger. For some, considering a merger may be a necessity – for others it may just be a best practice as forward thinking leaders.   Important considerations include timing, mission alignment, operational fit and process.

 

When should nonprofit leaders think about possible mergers?  An obvious trigger point is when an organization is financially unable to sustain its mission.  In such circumstances, a merger may be a necessary option.  A less urgent time may be when, in the course of regular collaboration with others in your sector, you find partners that may be able to achieve more through a merger than either organization could separately.  A final example is when there is a change in a nonprofit’s CEO.  Strong boards are not afraid of thinking through whether a merger can strengthen their leadership talent.  In any of these cases, the decision may not be to pursue a merger, but by considering the option the board has taken an important step in pursuing its fiduciary duty.

 

What organizations are potential partners?  Some proponents of mergers seem to support a broad array of combinations of entities.  That’s not the best approach.  Once CEOs and/or boards have agreed on potential merger partners, serious testing of their mission alignment is in order.  Ensure that each party understands the other’s mission, vision, values and core programs.   A good test of alignment is to see whether the current mission of either party could serve as the mission for both.  Alternatively, draft a test mission statement that would be appropriate for the combined entities.  If you can’t write a compelling draft statement, perhaps the alignment is not strong enough.

 

If the missions align, will the organizations fit?  At this stage, a thorough feasibility assessment is in order.  Start by assessing the culture of each organization.  After mission, culture is the most important consideration – and the hardest to fix if there isn’t a good fit.  Beyond culture, a partial list of considerations include:

  • The impact on fund development. Will this strengthen the donor base, or will donors see this as an opportunity to cut funding?
  • The new organizational structure. How will leadership responsibility be merged?  Will positions be eliminated or will you need new positions?
  • The financial impact. Will the new model save money for either organization or will additional funds be needed to achieve the new mission?  What will need to change with compensation and benefits, and how much will that cost?
  • Governance structure.  Will the boards be merged?  Will a smaller organization have one or more board seats after the merger?
  • Corporate structure.  What is the best structure for the reorganization?  Merger? Acquisition?  A new umbrella organization?

 

Are there any skeletons?  Due diligence is an important step for both organizations.  The goal should be to have “no surprises” after a merger.  The list of due diligence documents includes corporate documents, minutes, financial statements, legal information and insurance information.  It’s easy enough to find the long list of documents to exchange; it’s critical for the reviewer(s) to be thorough and experienced enough to identify areas for further investigation.

 

What happens after board approval?  Leaders who have been through mergers will probably tell you that this is when the hard work begins.  Each of the areas considered during the feasibility assessment needs an implementation plan built around the actual planned merger date.  What legal documents need to be prepared, approved and filed? How do you bring staff together to form a new, well-integrated team?  How will accounting systems be integrated?  Who will actually serve on the board?  What are the details of the insurance policy?  One final, very important consideration, what is the communications plan?   

 

The process is not trivial, especially when you remember that the basic work of the organizations needs to continue all throughout the process.  Look for ways to provide assistance to the people leading the process; thank the CEOs and board leaders because they are doing more work than most people can imagine; and remember that it is worthwhile if you strengthen your ability to fulfill your organization’s mission.

 

Warren Whitney professionals are happy to provide additional insight on the merger process.  Please don’t hesitate to call.

 

 

 

 

 

Mar 21
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March 2014 Newsletter: How Much Does Your Business Need in Cash Reserves

By Family Businesses, Finance & Accounting

Scott Compressed

Contributor: Scott Warren

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Businesses don’t always have a choice in their level of cash reserves, but having a target will help guide decisions regarding how to deploy cash. Deciding what that target should be depends on your business’s particular risk factors. There is no exact formula, but consider the two broad categories of revenue generation and fixed vs. variable expenses as a starting place and a range of three to six months of operating expenses for your cash reserve. If your risk in generating stable income and your fixed costs are both high, your cash reserve target should be closer to six months.

Try the following approach to get a sense of what type of cash reserve target you should have.

1. Start your analysis by identifying and assessing your revenue risks. These risks could include factors such as:

a. Diversity of revenues – Greater diversity equals lower risk. Consider various types of diversity, including industry, size of company, location, etc.

b. Concentration of revenue – This is the flip side of diversity of revenues. If a large percentage of your revenue comes from one source, your risk is higher.

c. Margin associated with revenue line items – Greater margins equal lower risks.

d. Control over revenue – Is your product or service necessary or optional for your customers?

e. Length of contracts – Do you have contracts? Do they span months / years? What are the terms of cancellation?

f. Market share – How likely is it that your organization will be on the “short list” as customers make their decisions.

g. Economy – How is the economy – local, national or international – based on where you draw customers?

h. Trends – Does your crystal ball show that things are getting better or worse?

i. Accounts receivable – Are you a cash business? Will you be able to collect your accounts receivable?

2. Next, identify and assess your fixed versus variable costs. More fixed costs mean higher risk because you cannot make adjustments as quickly and, therefore, a higher cash reserve target is appropriate. Consider:

j. Type of expense – Examine your fixed short-term vs. long-term expense commitments.

k. Debt service – How much do you have to pay to stay current, and what is that as a percentage of total expenses?

l. Long-term leases – Again, what are the fixed payment commitments?

m. Staff – Can you cut staff if you lose contracts? How fast are you willing to cut staff if there’s a downturn?

n. Corporate overhead – What other overhead costs are essentially fixed?

o. Variability of expense – Examine the flexibility of expense levels for different business units.

3. Finally, plot your risk assessment on a matrix where one axis represents revenue risks and the other represents fixed cost risks. See an example below.

 

                     Example of Completed Cash Reserve Matrix

                       Suggesting a Reserve Equal to Two Months of Expenses

                    (letters indicate risk factors listed above)

Cash Reserves chart

 This methodology should provide structure to support to your estimation of cash reserves.

May 03
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Operational Analysis

By Finance & Accounting, Privately Held

The client was a professional services firm that provided accessibility testing and training for businesses and organizations. The client had realized that they were not getting the management information that they needed to manage the business properly, and that they were not able to provide their bank with the specific information that it needed. In addition, the client did not know the exact profitability of each position/employee. As a result, they engaged Warren Whitney’s Scott Warren to conduct an operational review of the company’s accounting and informational functions.

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May 01
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Interim CFO

By Finance & Accounting, Privately Held

A privately held manufacturing company had grown rapidly without adequate accounting systems and controls. When Cyndy Lowery, an owner and director of Warren Whitney, was engaged to work with the company, the president was not receiving timely financial statements, information was not being entered accurately into a newly created job cost database, and the bank had issued strong warnings that its relationship with the company was at risk. The bank ultimately demanded a change in banking relationships.

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