From Bankruptcy to Stability: How IQ BackOffice Helped Hair Cuttery Rebuild Its Financial Infrastructure

In April 2020, Creative Hairdressers, Inc., the operator of Hair Cuttery, filed for Chapter 11 bankruptcy amid the COVID-19 pandemic. This led to the closure of most of its 800+ salon locations.

In June 2020, HC Salon Holdings acquired Hair Cuttery through an asset sale during the bankruptcy process, aiming to revitalize the brand by modernizing technology, expanding marketing reach, and implementing innovative operational strategies. HC Salon Holdings successfully reopened 500+ salons with over 7,000 employees as part of its turnaround efforts.

Challenges

Post-acquisition, HC Salon Holdings faced the daunting task of establishing a comprehensive accounting infrastructure within a 30-day window. This entailed integrating new financial systems with operational platforms, developing financial reports, and implementing best-practice business processes across various functions, including general accounting, accounts payable, sales and deposit reconciliations, accounts receivable, fixed assets, and payroll management. The urgency was compounded by the need to meet licensing requirements while shifting from biweekly to weekly payroll cycles, improving financial visibility and employee payments.

Solutions

IQ BackOffice (IQ) partnered with HC Salon Holdings to deliver a robust Finance and Accounting solution within the critical 30-day timeframe. Key actions included:

Implementation of Sage Intacct: Deployed a cloud-based accounting system to streamline financial operations.
Integration of Inventory and Purchasing Workflows: Utilized Electronic Data Interchange (EDI) for efficient management of product inventory across salon locations and retailers.
System Integration: Connected the accounting system with a new Point of Sale (POS) platform, a third-party Warehouse Management System, and a Business Intelligence (BI) tool for customized reporting.
Deployment of Archimedes Platform: Introduced IQ’s proprietary platform to digitize financial transactions, ensuring a complete audit trail.
Process Optimization: Transitioned payroll from a biweekly to a weekly schedule and implemented weekly flash reports to enhance financial visibility.
Implementation of Best Practices: Standardized financial workflows using industry best practices, ensuring efficiency, accuracy, and compliance across all accounting processes.

These measures ensured that HC Salon Holdings had a scalable and compliant financial infrastructure, facilitating seamless operations and informed decision-making.

Results

The collaboration yielded significant benefits:

Cost Reduction: Achieved approximately 80% savings in back-office costs compared to previous expenditures.
Operational Efficiency: Enabled timely and accurate financial reporting, supporting successful and profitable operations.
Enhanced Compliance: Ensured adherence to licensing requirements and established robust internal controls.

These outcomes underscore the effectiveness of IQ’s solutions in driving financial and operational excellence.

Client Testimonial

IQ BackOffice partnered with us from day zero. They were able to help us stand up the business and design and implement reporting practices within 30 days.

Chris Conover

CFO,
Hair Cuttery Salons

He further emphasized the impact on operational efficiency, “We were able to trim approximately 80% of normal accounting and reporting costs.”

Conclusion

The strategic collaboration between HC Salon Holdings and IQ BackOffice was pivotal in revitalizing Hair Cuttery’s operations post-acquisition. IQ BackOffice’s rapid deployment of an integrated accounting infrastructure, coupled with process optimization, not only ensured compliance and operational continuity but also delivered substantial cost savings and enhanced financial transparency. This partnership exemplifies how IQ BackOffice supports businesses in navigating complex financial restructurings, enabling them to achieve sustainable growth and profitability.

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Personal Care Services

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