In the dynamic world of logistics, maintaining a robust financial system is crucial for smooth operations. This case study revolves around a leading logistics company that faced significant challenges in their financial department.
The departure of a key accountant with just one month’s notice left them in a precarious situation. The replacement, though capable, was at a more junior level. Complicating matters further was the disjointed system for processing sales invoices and purchases, leading to significant disparities between the source system and Xero, the chosen accounting software.
The Challenges
- Over-reliance on a Single Individual
The logistics company had been heavily dependent on a single individual to manage their financial operations. The sudden departure of this key accountant created a void that needed urgent attention.
- Replacement at a Junior Level
The replacement bookkeeper was brought in at a more junior level, which introduced challenges in maintaining the same level of financial acumen and efficiency.
- Discrepancies in Systems
Sales invoices and purchases were processed through a separate system, leading to substantial differences between the source system and Xero, their accounting software in use.
The Solution
To address these challenges, the company engaged with Ascentis to implement a VFM (Virtual Finance Manager) Service. The comprehensive solution included:
- Month-End Review Process
The bookkeeper processed transactions throughout the month, and Ascentis performed a thorough month-end review process. This involved scrutinising the balance sheet, profit and loss (P&L), and VAT returns.
- Training and Ongoing Support
The newly appointed bookkeeper received training and ongoing support from Ascentis to ensure a seamless transition and continued efficiency.
- Process Improvements
Recommendations were made for processing improvements, such as moving away from staff expenses. A bespoke bookkeeping checklist for the month-end was developed to streamline operations.
- System Integration
Efforts were made to understand the extent of system differences, leading to adjustments in Xero to ensure a complete and accurate view of sales and purchases each month. Recommendations and support were provided to resolve software disparities, including the implementation of a live link and strict month-end cut-off procedures.
- Financial Visibility and Business Recommendations
A budget was developed, enabling the Director to take a step back and assess business performance. Business recommendations, such as minimising funds in the current account to maximise interest earned, were also provided.
Value Impact
The implementation of the VFM Service brought about significant positive impacts:
- Management Accounts Aligned with Expectations
They gained the ability to produce management accounts in line with client expectations, ensuring transparency and accuracy in financial reporting.
- Cost Savings
The use of a VFM Service proved to be a cost-effective alternative to appointing a qualified accountant, resulting in substantial cost savings for the company.
- Reduced Stress for Directors and Staff
Directors and staff experienced reduced stress levels, thanks to the support and knowledge provided by Ascentis. Improved financial information in Xero and streamlined processes contributed to a more efficient and less stressful work environment.
- Enhanced Financial Visibility
Directors benefited from better visibility into the financials, enabling them to make informed decisions and assess business performance more effectively.
Conclusion
This organisation was able to successfully navigate through the financial challenges caused by the sudden departure of a key member of staff by embracing the VFM Service from Ascentis.
The holistic approach, including training, process improvements, and system adjustments, not only addressed immediate concerns but also positioned the company for long-term financial success.