Client Overview
Precision Metal Products is a second-generation family-owned business specializing in custom metal fabrication for the aerospace, defense, and medical device industries. With over 30 years of experience, they've built a reputation for high-quality, precision components.
Despite their technical expertise, the company faced significant financial challenges that threatened their ability to invest in new equipment needed for growth and maintain their competitive edge in a rapidly evolving industry.
The Challenges
Declining Profit Margins
Profit margins had declined from 12% to 7% over three years due to rising material costs and pricing pressures, threatening the company's long-term viability.
Cash Flow Constraints
Long payment cycles (net-60) from major customers combined with inventory requirements created significant working capital challenges and limited growth.
Equipment Financing Needs
The company needed to invest $1.5M in new CNC equipment to remain competitive, but traditional banks were hesitant due to inconsistent financial performance.
Our Solution
ProFit™ Method Implementation
We implemented our proprietary ProFit™ Method to address the core financial challenges facing Precision Metal Products. This comprehensive approach included:
- Comprehensive cost accounting analysis to identify hidden profit drains and inefficiencies
- Implementation of job costing system to accurately track profitability by customer and product line
- Development of data-driven pricing strategy based on actual production costs and target margins
- Quarterly business reviews to track progress and make strategic adjustments
Implementation Timeline
Initial Assessment
Comprehensive financial analysis and identification of key challenges
Strategy Development
Creation of customized financial improvement roadmap
Implementation
Execution of cost accounting, pricing, and cash flow strategies
Ongoing Optimization
Quarterly reviews and continuous improvement
The Results
Tax Savings
Annual tax savings through R&D credits, accelerated depreciation, and strategic entity restructuring.
Working Capital Reduction
Improved cash flow management and working capital optimization freed up resources for strategic investments.
Profit Margin Increase
Margins improved from 7% to 18% through cost accounting, strategic pricing, and operational efficiencies.
Long-Term Impact
Financial Transformation
- Secured $1.5M equipment financing that three banks had previously declined
- Reduced cash conversion cycle from 87 days to 62 days
- Implemented data-driven pricing strategy that improved margins by 11%
- Established quarterly business review process for ongoing financial optimization
Business Growth
- Increased production capacity by 35% with new equipment
- Added 12 new jobs in manufacturing and engineering
- Secured three new major contracts in aerospace and medical device sectors
- Positioned for sustainable growth with improved financial foundation
The team at Schapira CPA transformed our financial operations. Their ProFit™ Method gave us visibility into our true costs and profitability for the first time. The tax savings alone paid for their services many times over, but the real value was in helping us secure the equipment financing we needed to grow and the strategic guidance that's put us on a sustainable path to profitability.
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