The shop is busy, the backlog is full, and nobody can say what a job actually cost.
Accounting, controller and fractional CFO work for manufacturing, from a team that has closed these books before.
What we usually see when a manufacturer passes $10M
Standard costs were set years ago and never updated, so job profitability is a guess. Inventory and work in progress are counted once a year and the adjustment is a surprise. Overhead is absorbed on a rate nobody has recalculated. Big customers pay in 60 days while material is paid in 30. Equipment sits on notes that do not match the production cycle. The bank wants a borrowing base and the books cannot produce one cleanly.
The numbers we watch
— Gross margin by job, product line and customer
— Material, labor and overhead variances against standard
— Inventory and WIP turns
— Overhead absorption rate against actual
— Cash-conversion cycle: material paid to invoice collected
— Capacity utilization and revenue per labor hour
— Borrowing base: eligible receivables and inventory
— Equipment debt service against the 13 weeks
What we build
— Job and product-line margin in the monthly package
— A cycle-count discipline so inventory ties monthly, not annually
— Standard costs and overhead rates recalculated on a schedule
— A 13-week forecast on customer terms and material commitments
— Borrowing base and covenant reporting the bank accepts
How the numbers connect
What the owner sees on Monday.
Everything to the right explains it.
Adds to cash
Collections
DSO by customer
Margin by job
Price − material − labor − overhead
Takes from cash
Inventory and WIP build
Purchases and labor ahead of shipment
Equipment notes
On their real dates
The tree shows how cash is built for this industry: what adds to it, what takes from it, and the measures behind each. It is the structure of the scorecard we build.
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