Case Study No 1 - The Details

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Key Points identified

• Sage Accounting system used, but didn’t reflect the current situation

• No relevant Management Accounts issued

• No Cash Flow Forecast performed

• Only 1 full-time competent accounts manager who was answering many queries on engineering data, allowing very little available time to complete the accounting system input
  

• Review of available Overheads and Financial options needed
  

• No formal budgeting system in place

Key Points addressed

Initially provided bookkeeping service, which enabled accounting systems to be updated

Soon obtained grasp of company culture and information systems, which established that a full-time bookkeeper /administrator was required. Interviewed 8 applicants and appointed 1 full time incumbent within 2 months. Further 2 months required for induction/training, performed by Dallas & Martin and accounts manager

Work In progress not identified on a regular basis and was only valued at year-end. Instigated introduction of valuation process that led to internal management introducing an integrated Quotation, Ordering Service and Invoice System. Not only could this value Work In progress, it also identified un-invoiced services that were not always identified and, therefore, remained un-invoiced

Cash Flow monitored on a weekly basis, which identified any week where the overdraft/factoring limits would be exceeded. This resulted in increased efforts on sales invoicing or minor delays on supplier/HMRC payments

Reviewed overheads

Outcomes

In conjunction with directors managed to renegotiate with other banks to improve facilities offered and at reduced margins on service and interest charges, plus improved levels on concentration levels

Reviewed insurance requirements with third party broker and obtained improved cover at reduced costs

Eliminated any standing orders not needed. i.e. insurance on leasing item

In both cases the bank and insurance costs were reduced by 50%, which resulted in savings of £40k per annum; also, as the Financial Controller was replaced by a bookkeeper, this resulted in further savings of £35k per annum

Set up Budgeting System, which included 2 prior years to the current year company was trading in.3 year plan than introduced for current year plus 2 future years. Full analysis by customer and category was made available, which could be very useful in the event of a future sale of the company, i.e. Information easily available for drill down or export

Prepared year-end accounts and tax computations for 2 years

As the company now has full control of its accounting function, D&M is only required on an ad hoc basis, e.g. Budget and Forecasting updates, if required.    

 

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