Stabilising and Expanding a Professional Services Business Following Rapid Growth

Published - Feb 27, 2023

AI Digital is a business transformation consultancy that partners with companies to guide them through change, developing their services, or implementing new projects. AI Digital’s primary focus is on digital transformation and project and programme management, and with their Biomatics brand, deliver transformation projects within the Life Sciences, Health and Care sectors.

GMT first spoke to AI Digital Ltd in 2020 about CFO services, specifically management accounts reporting services. They were not yet ready to pull the trigger as they were experiencing a period of rapid growth and wanted to focus on capitalising on it. It wasn’t until May 2021 that they were ready to bring GMT onboard.

Finding Financial Stability After Rapid Growth

GMT’s first priority was to stabilise the finances because a lot had changed in a short period of time. Not only had the number and value of the client accounts changed, but they had also increased their resources significantly to meet the demand.

GMT CEO, Marcel Frei, generated comprehensive management account reporting so that he and AI Digital stakeholders could take a 360-degree view into AI Digital finances and what had happened over the previous months. One of the main reasons AI Digital wanted to outsource their management account reporting in the first place was to make sure they could consider the financial implications of their decisions so they could grow their business on a solid foundation. Marcel runs monthly financial meetings for AI Digital to review its KPIs. He also runs bi-weekly finance meetings to allow AI Digital to analyse the financial implications of operational decisions. These meetings provide a CFO-level overview of the business.

"Engaging with GMT to help support our back-office finance has been a great decision and investment. They have helped us through some exciting growth of the business, and their insight and value to this have been invaluable. The team understand our business and our needs, and thus we have built a strong partnership to continue driving the business forward, this is backed by a well-balanced financial KPI pack that helps us understand where we are and what our focus should be."

Client Contribution Analysis

One of the key steps in stabilising the business after its growth was to look and understand the makeup of AI Digital’s client portfolio. This involved looking into each client account and recording the revenue, profit, engagement, and deliverables. These metrics allow professional services businesses to see and understand the health of the client. It allows to make decisions that impact the overall financial health of the business. It also has the ability to point to areas where AI Digital could streamline their processes and structures.

One of the major outcomes is also understanding individual client contributions to the business. An area where GMT adds massive value to their clients is their experience partnering with businesses in a number of different industries to help them prepare their business for sale. The process requires analysis of business income and expenses in minute detail. This gives them unique insight into the metrics for success and how to measure the health and growth potential of companies in these industries. For professional services, one of these key metrics is client contribution analysis.

Cashflow Management for Bench Resources

Companies in the professional industries sector experience a unique challenge from other industries. They require a team with a broad range of expertise to service their clients, but they may not have work for the team to do all the time. Different companies will approach this in different ways. AI Digital decided to keep these expert employees on staff so they could go into their pitches confident that they had the expertise to undertake future projects. They wouldn’t have to risk turning work away because they were unable to hire the right person in time. This is called a “bench resource management” as they are on your bench, ready to be put into play when needed.

From a cash flow perspective, a benched resource represents a pure cost because they are not working on income-generating tasks while they are benched. This is a prime example of where financial reports can influence decision-making in every single department. We worked with AI Digital stakeholders to look at the financial implications of benched resources in a number of different scenarios so they could find resource management solutions that fulfilled both client and cash flow needs.

GMT recently went a step further in bringing together some analysis held within the operations team and bringing it to life within the finances.

The Operations team had been tracking which resources were working on specific engagements. GMT utilised this data to pull together a utilisation report and measure this against internal targets. It allowed the management team to clearly see how the overall staff portfolio was impacting the business finances. It also allows the management team to clearly identify gaps that need to be worked through.

Seamless Payroll Integration

In August 2021, GMT was asked to take over payroll for AI Digital. This was transferred into Xero so that payroll would integrate seamlessly with the rest of the financial reports. GMT and AI Digital could quickly and easily generate NI reports, gross wage reports, and more through Xero.

Business Expansion

In early 2022, AI Digital was restructured to establish their Biomatics brand as a 2nd business, building on a growth in services offered to the bioscience sector.. During the pandemic, they had partnered with Covid-19 testing facilities and labs to assist with projects aimed at bringing about a safe but rapid rollout of resources to handle the pandemic. Previously, they had focused on project management and change management in the IT sector. They decided to create Biomatics to leverage this service offering within the biosciences – and now also the NHS and Care - sectors.

GMT is undertaking an ongoing project to help them separate out the revenue and internal expenses for these two businesses. They are also implementing processes to help everything run smoothly both within the 2 companies and as a whole.

Financial Administration Add-On

In mid-2022, GMT expanded their services to include financial administration to fulfil a need AI Digital had. They had discussed hiring a full-time financial administrator, but there was not enough work to require a full-time position, so GMT suggested they provide the service on an ad-hoc basis.

This additional service has provided substantial benefits to AI Digital in the following areas:

• GMT was able to see internal processes first-hand and optimise some of them * Every team can access financial support from a party that has knowledge of the entire business's finances
• AI Digital saved money by engaging GMT on an ad-hoc basis for financial administration rather than hiring a full-time financial administrator
• GMT have a greater overview of all the business moving parts and so can offer even more insight

“GMT Finance have taken all the weight off our shoulders, allowing us to focus on our clients and our core business. It is the value-add that Marcel and the team at GMT provide that makes the difference. They are always available, providing advice and guidance, responding to the challenges and questions we ask, sometimes at short notice, in order that we can quickly make those critical business decisions.”

“We don’t need our own CFO. It feels like we already have one.”

Vernon Jones, CEO of AI Digital Group

Posted in Case Study on Feb 27, 2023