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RA Consultants has seen significant growth over the last few years, but not without facing some challenges. And the owner needed to make changes in key positions.
Established in 2004, RA Consultants is a private, independent firm of engineers, designers, surveyors, and professional construction inspectors working across every aspect of the water infrastructure environment. Founded by John Allen, RA Consultants has grown into locations in Cincinnati, Dayton, Columbus, and Louisville KY.
MLA began serving as a Financial Advisor to RA in 2017. Below is the first of a series of stories that describe that engagement and what it accomplished. You can visit the RA Consultants client page to read the whole story.
John Allen stepped away from RA for a brief time to focus on other priorities. He left a capable operations leader and his CFO in position to run the firm. But things were not going well in his absence.
When John decided to reenter the business in 2017 it had grown beyond what he could manage on his own, and the financial problems were too entrenched for him to work them out himself.
John knew he had to replace his existing CFO but didn’t have the time or capacity to manage the transition to a new hire. He needed help quickly, which meant finding someone who could step in on short notice and take control.
John contacted Seth Morgan, CEO of MLA Companies. During a series of meetings, Seth introduced John to Doug LeConey, a Strategic Principal at MLA. Doug was confident he could do the work, and RA became an MLA Client in August of 2017.
“The current CFO was on vacation,“ Doug remembers. “John needed to make a decision about what to do before he got back.” There were a lot of problems in the finance team, and the sooner Doug could get started, the better.
The previous CFO had limited experience and was not a CPA. As a result, half of the system was running on a cash basis, and the other half was accrual, creating inaccurate and inconsistent financial statements.
The effect of these problems was that no one knew exactly how much money they had, and there was a lot of anxiety and disagreement in the management team. Worst of all, RA was losing tens of thousands of dollars a month and would soon have fully utilized its credit line.
Doug moved quickly to stabilize the cash flow and get an accurate picture of the financial situation. This meant properly accruing expenses to match revenues and creating project reports to fully explain revenue and direct costs.
Then Doug created a 9-week rolling cash forecast to tightly manage cash flow. This clearer picture allowed the team to focus on collecting old receivables, aggressively pursue collections, and minimize bad debts.
“The lack of clarity about the financial situation meant there was no sense of urgency about addressing these problems,” Doug recalls. “Once we got the information where everyone could see it, we were able to start creating accountability.” Making changes in key positions had worked.
The improvements at RA were noticeable. Although they were well into the third quarter of 2017 when MLA came on board, the firm showed a modest profit in 2018. Revenue and profit continued to increase in 2019 and 2020.
For more information, visit the RA Consultants client page.