Cedar Ledger Services

The account's allocated loss is not the savings available from exiting

Monthly company revenue of $120,000 less $18,000 of cancellable contractor support, $6,000 of cancellable client-specific software, $72,000 of fixed salaried payroll including payroll burden and owner compensation, and $16,000 of fixed overhead produces $8,000 of operating profit before tax. The restaurant account has $8,000 of contractor costs and $2,000 of software costs that would cease after contractual notice, leaving $14,000 toward fixed costs. Allocating $20,000 of salaried payroll and $4,000 of overhead to it produces a reported account loss of $10,000. Exiting without replacement revenue or an actual fixed-cost reduction would therefore reduce company operating profit from $8,000 to a $6,000 loss after the avoidable costs cease.

Review capacity, not total headcount, limits reliable delivery

The team consists of eight bookkeepers, two senior reviewers, one operations coordinator and the owner. After administration, training and leave allowances, bookkeeping capacity is 960 productive hours monthly against 900 hours of demand; senior-review capacity is 240 hours against 270 hours of demand. The restaurant account consumes 260 bookkeeping hours and 100 review hours, included in those totals; contractor support is already reflected in the remaining internal workload. The owner supplies the extra 30 review hours by deferring sales and management work. Intake chasing, reconciliation, senior review and final report release all need tracking: spare bookkeeping hours cannot automatically substitute for qualified review hours, and late records concentrate work near deadlines.

Positive profit does not provide much protection against late payment

Assuming invoices are issued evenly and customers pay consistently, the restaurant account's 60-day collection cycle ties up approximately $48,000 in receivables, while the other $96,000 of monthly revenue collected in 30 days ties up approximately $96,000. Total steady-state receivables are therefore about $144,000. With the $112,000 of monthly operating costs paid in the month incurred, normal collections leave $8,000 before tax and distributions. Starting unrestricted cash is only $35,000: if one expected $24,000 restaurant payment slips into the following month, collections fall to $96,000 and operating cash falls by $16,000 to $19,000, before any tax or distributions.

Test a defined service scope before deciding to exit

Propose a 60-day pilot with explicit record-submission deadlines, standardized location files, named client approvers and separately authorized cleanup work. Test whether these changes can reduce internal bookkeeping demand by 40 hours and senior-review demand by 40 hours monthly, bringing company totals to 860 and 230 hours respectively. These are workload hypotheses, not promised savings: salaried payroll remains unchanged unless staffing changes, and contractor spending falls only if purchased hours actually decline. Compare contribution and delivery reliability before and after the pilot.

Manage the complete close process and protect reviewer time

Have the operations coordinator maintain a weekly queue showing missing inputs, reconciliations awaiting completion, review hours required and reports awaiting release. Introduce a pre-review checklist and test whether a qualified bookkeeper can handle selected review tasks under supervision, measuring both reviewer time saved and any additional rework. Schedule client deadlines against practical capacity at each stage rather than accepting every deadline based on total staff availability. Do not sell newly available capacity until the pilot demonstrates that it is repeatable.

Negotiate cash terms and establish a financially honest exit gate

Seek a staged move from 60-day to 30-day payment terms, subject to client agreement. At unchanged revenue and consistent payment, this would release approximately $24,000 of working capital once—not add $24,000 to recurring profit—and the collection schedule must confirm when that cash arrives. Review a rolling 13-week cash forecast before distributions. If restructuring fails, evaluate an exit only with explicit notice costs and either a funded plan to tolerate the resulting loss, at least $14,000 of replacement monthly contribution after incremental costs, or documented fixed-cost reductions; freeing employee time alone does not close that gap.