The Background
This client is an Internet Retailer who specialises in selling consumables online. There are 6 full time people in the company including support, service and fulfilment. The two owners are involved in managing the operations, finances and the outsourced web development.
The Situation
Prior to working with AscenTrust the client had a part time bookkeeper come in a few times during the month for a total of around 20 hours per month to input the transactions into a Sage accounting system, and to pay VAT, PAYE and PRSI to Revenue at the appropriate times. Sometimes queries could not be handled when the bookkeeper was not there, which lead to delays in responses to both customers and suppliers. The directors of the company believed they were getting a monthly P&L but in fact the bookkeeper did not calculate accruals and prepayments properly. There were no management accounts, no cashflow reports or forecasts and only a rudimentary budget. One of the managers did the payroll himself on Sage's MicroPay.
For personal reasons the client did not want to change the bookkeeper or the payroll process.
The Solution
The starting point for AscenTrust was to establish a budget with the senior manager. Subsequently, AscenTrust provides a set of management accounts to the client on a monthly basis which consists of a real P&L and Balance Sheet which are also itemised by category comparisons with the previous year and budget. Additionally, the reports include a cash flow statement and an updated cash flow forecast.
Outcome
The Internet Retailer is pleased with the extra information and control from getting management accounts. Just some of the extra benefits include:
The cash flow forecast has proven to be of huge value, the finance manager understands what terms they can offer to their suppliers and customers without putting pressure on their overdraft. Indeed, they are even doing a little treasury management now, in other words putting unneeded cash into a deposit account and making a bit of interest on it.
Each month AscenTrust raises issues with the management; this might be a cost or sales trend. On one occasion it was found that they were paying for a service by standing order that they no longer used.
AscenTrust is taking some of the day to day queries from the management which has resulted in better customer service. As all the transactions are on the company's own accounting system AscenTrust cannot answer all queries. The client is considering moving to AscenTrust's online accounting system so that these queries can be answered promptly.
AscenTrust picked up on a few small bookkeeping issues, including one related to VAT. AscenTrust helped the bookkeeper with these issues and everything is running smoothly now. The company is investing in the career development of the bookkeeper to take more financial management accountability. AscenTrust is pleased to be able to help the company develop the career of this person.
