Overcoming Financial Chaos
Turning a bookkeeping mess into financial clarity and confidence to grow
A Cash Flow Crisis
We were introduced to Ray and Peter following a crisis where their company nearly went bust due to a cash flow issue. They were looking for a new accountant for their company who could deliver monthly management accounts, attend monthly board meetings with the two Directors and work closely with their bookkeeper who they were worried was struggling.
The crisis came about as an equipment supplier had suddenly got in touch demanding immediate payment; the bookkeeper had been sat on the £80,000 invoice as there had been a query and she had been ignoring chasing requests due to lack of time. Accounts were only produced annually and right up to the filing deadline, 9 months after the year end, so the lack of financial information meant the Directors weren’t aware the large bill hadn’t been paid. It was compounded by the bookkeeping being behind in her bookkeeping.
The company simply did not have £80,000 cash readily available as money had been spent in the meantime on other direct costs and overheads in the business and drawn by the Directors themselves from the business as dividends. This was a traumatic and worrying time and although they eventually sorted the problem out and settled the bill, the Directors didn’t ever want to find themselves in this position again.
Restoring Confidence
So as well as producing monthly accounts to a fairly tight deadline for the monthly meeting with the Directors, we had to piece together the information from what were in effect incomplete records as the bookkeeping was up to a year behind. We made sure all bank transaction information was checked and items missing posted to the bookkeeping and then identified what else was missing. This incomplete records exercise continued for a considerable period, month by month as the bookkeeper never caught up. However because of the tight financial checks we put in place around the bookkeeper, the management accounts we produced were reliable and the Directors had the confidence to manage and grow their business. The company had some blue chip well known customers, so the quality of their financial records was key.A Cash Flow Crisis
We were introduced to Tony and Peter following a crisis where their company nearly went bust due to a cash flow issue. They were looking for a new accountant for their company who could deliver monthly management accounts, attend monthly board meetings with the two Directors and work closely with their bookkeeper who they were worried was struggling.
The crisis came about as an equipment supplier had suddenly got in touch demanding immediate payment; the bookkeeper had been sat on the £80,000 invoice as there had been a query and she had been ignoring chasing requests due to lack of time. Accounts were only produced annually and right up to the filing deadline, 9 months after the year end, so the lack of financial information meant the Directors weren’t aware the large bill hadn’t been paid. It was compounded by the bookkeeping being behind in her bookkeeping.
The company simply did not have £80,000 cash readily available as money had been spent in the meantime on other direct costs and overheads in the business and drawn by the Directors themselves from the business as dividends. This was a traumatic and worrying time and although they eventually sorted the problem out and settled the bill, the Directors didn’t ever want to find themselves in this position again.
Restoring Confidence
So as well as producing monthly accounts to a fairly tight deadline for the monthly meeting with the Directors, we had to piece together the information from what were in effect incomplete records as the bookkeeping was up to a year behind. We made sure all bank transaction information was checked and items missing posted to the bookkeeping and then identified what else was missing. This incomplete records exercise continued for a considerable period, month by month as the bookkeeper never caught up. However because of the tight financial checks we put in place around the bookkeeper, the management accounts we produced were reliable and the Directors had the confidence to manage and grow their business. The company had some blue chip well known customers, so the quality of their financial records was key.
From Confidence to Financial Stability
Eventually the Directors agreed to our recommendation and we were briefed to bring the bookkeeping up to date, a complex project as it was 12 months in arrears. The company wasn’t small as they had nearly 15 employees. Thomas led the project and within a month the company’s books were up to date. The bookkeeper left the business shortly after this.
Through the work we undertook in sorting out the bookkeeping and providing certainty in the financial numbers produced from that reliable base, we were able to restore stability and instil confidence for the Directors. Safe in the knowledge that they have a comprehensive and up-to-date understanding of their financial position, Tony and Peter have the peace of mind to focus on growth and the operations, where their true passions lay.
This experience illustrates the critical role that an experienced accountancy partner can play in restoring and maintaining the health of a business.
