Case Study- Cocktails distributor receives high-level financial reporting support

Background

Case StudyAn early-stage business developing and distributing batched cocktails, predominantly for on-trade distribution, was seeking accounting and financial management support. The current FD was leaving, and the business was struggling to find the right balance between an ambitious and bespoke IT led management reporting solution developed by the FD, and a more resilient and sustainable solution capable of being operated by non-technical resource and meeting the current needs of the business.

A short handover was available, but time was critical. Systems and processes needed to be recorded, and resources made available to ensure that there was no interruption to the delivery of management information, and to ensure the continued smooth running of operations.

Challenges

An automated solution had been developed to import and process data from multiple sources using macros and VBA programming. The system generated sophisticated financial reporting and graphics, only part of which was relevant and used by stakeholders. More importantly, support for the system was dependent on the outgoing FD, and with no documentation or in-house VBA expertise, this fragile system left the business very exposed.

It also became apparent that focus had been on systems development at the considerable expense of accurate and reliable management information. Traditional “checks and balances” had not been applied, and input from supporting systems had not been verified rendering historic margin analysis unreliable.

An examination of the system suggested that this had been heavily over engineered given the size and complexity of the business, with levels of automation that were not practical to maintain without VBA technical resource. Small changes or additions to GL codes within the accounting system caused the data import to fail and required mapping tables to be updated with each change. This system might have been appropriate for a much larger and more complex businesses, or as a hosted solution.

Although the reporting templates were relevant to the business, the means by which these were being produced left the business vulnerable, creating an unacceptable level of business risk.

Solutions

Working closely with the CEO, we identified from a substantial reporting deck what the key stake holders actually needed, so that the reporting pack generated each month was more relevant and manageable. Following a detailed review, modifications were made to remove unnecessary back end automation, and to create a more robust solution, less dependent on technical resource.

The focus could then be shifted to generating more timely, relevant, and accurate reporting. Following this initial phase of the assignment, a full financial management service was provided including transaction processing, reporting and liquidity management.

Benefits

The solution enabled the business to manage the risk of system failure; provided more timely, relevant, and reliable management information; and enabled the CEO to focus on driving the business towards an exit. Following an earlier partnership with a major spirits distributor, the business was successfully sold in November 2020.

Client Testimonial

“Steve Smith grasped the important issues very quickly and developed a very good monthly financial report that covered all relevant details and was used by the Board to review performance and agree strategy and priorities. Steve was extremely accurate and conscientious and was always available to help with queries. The EFM Book-keeper was also excellent back up and very good at solving paper-work problems. Steve has extensive commercial experience and his views were always very sound.”

Peter Wall, Director & Shareholder, Tails Ltd

EFM Expert: Steve Smith