Success Story: Software Acquisition with a Synched and Strong Cash Flow
Learn how SPRCHRGR streamlined revenue collection to clearly communicate the business’ cash flow strength to potential investors.
Core Challenges
MedCompli, a company committed to revolutionizing the healthcare, life science, and pharmaceutical industries, develops innovative software solutions that simplify compliance management. As the business found product-market fit and sales began outpacing its capacity to keep up with invoicing and cash collections, the bare-bones accounting solution they started out with suddenly became a real liability. Chris Gingras, President and CEO, saw a clear need to upgrade the back office with a stronger team, more robust tools, and a rapidly scalable approach.
How We Supported & Supercharged
Cash, collections, and improving financial health
It takes money to make money, so fast-growing businesses tend to burn cash faster than they can generate it!
“When we started, we focused on tackling the immediate cash flow challenges,” says Katerina Burns, Accountant at SPRCHRGR. “Based on the business trajectory, we knew incoming cash and collections were key to improving financial health. So, we immediately started syncing the missing information between systems and fixing the upstream processes causing the cash flow issues in the first place.”
SPRCHRGR implemented right-sized technology solutions to quickly organize financial records and streamline the invoicing and accounts receivable (AR) functions. This directly improved cash flow and enabled the business to precisely track and report recurring subscription revenues from its expanding customer base.
Creating clarity in credit accounts
It’s common for early-stage bootstrapped founders to pay for expenses from multiple accounts, often using a mix of both personal and business credit cards. We combed through the historical transactions to provide clarity and accountability, looking backward, then helped the business better align payment outflows on dedicated credit cards for each function, going forward – creating a diligence-ready set of accounting records and process controls that can be shared with outside parties.
Recurring revenue recognition
When MedCompli first hired SPRCHRGR, their first few cohorts of annual contracts had already lapsed, and they were behind on billing for annual renewals. After reviewing each contract, we quickly identified the gaps and developed a master schedule that tracks billing, deferred revenue, and contract renewal milestones. This led to clear and accurate revenue recognition, which enabled MedCompli to report and project future revenues and cash flows on a GAAP-compliant accrual basis – crucial KPIs that investment bankers, attorneys, and other deal-makers rely on to calculate enterprise valuation when preparing for a transaction.
Setting the stage for an eventual liquidity event
SPRCHRGR understands the importance of correctly setting up financial systems and records to align with the business value story and maximize the potential for future opportunities.
“Clients come to us because we know what we're doing, and our processes are designed to serve their best interests, both now and into the future,” says Antonella DeMari, Controller at SPRCHRGR. “We perform month-end closes the ‘right way’, maintaining detailed schedules to reconcile all key balance sheet accounts to give company management and potential future investors complete confidence in the numbers. Business owners count on us to think several steps ahead in our work so they can focus their attention on execution and growth.”
Outcome
Ready for the right opportunity
We prioritized solutions that significantly streamlined revenue collection, improved cash flow, and ensured timely invoice submissions because we understood that showing consistent month-over-month profit growth and positive cash flow would be vital in attracting the next round of investors.
"At MedCompli, our mission has always been to simplify compliance management," said Chris Gingras, MedCompli | A MediSpend Company. “SPRCHRGR helped me simplify my financial management. We could scale the business and were ready when the right investment partner approached us. I appreciate not just their attention to detail and solving the initial cash flow challenge, but they were thinking ahead for me and what I might need for a potential sale.”
Everything is in place and professionally managed.
At MedCompli's request, Katerina met with potential investors to demonstrate how the company financials had been set up with conventional best practices and were current, backed up, and justifiable.
The investors, impressed with the level of detail and accountability, had complete confidence in the business's vitality. MedCompli had everything in place for a new partner, MediSpend, to enter the picture and strategically align. In 2024, MediSpend, the compliance system of record for some of the world's largest pharmaceutical, medical device, dental, and emerging biotech companies, acquired MedCompli.
MedCompli’s leadership team leveraged SPRCHGR’s services throughout the transaction, and they continue to entrust our team to support the larger and still growing business into the future.
At SPRCHRGR, we bring a future-focused approach to our accounting and outsourced back-office services. Contact us to learn how we can help your business optimize systems, strengthen cash flow, and prepare for long-term success.