Wholesaler achieves 50 percent cost savings and a successful business sale
When a business is under the pump financially, cutting costs often feels like the only solution. But as this case study demonstrates, sometimes all it takes is a restructure and putting the right people in the right roles.
Read on to learn how we helped a wholesaler streamline their finance team, improve their management reports and ultimately achieve a successful sale of the business.
The background
When this client came to us, they were growing but under financial stress, which was largely due to poor debtor management and excessive debt. Their finance team was resourced by a full-time accountant and a
bookkeeper, but the management team had the good sense to question whether this was the best setup for their business. After making a difficult decision to terminate the in-house accountant role, they came to us seeking an outsourced finance solution.
By making this strategic move, a
cost savings of approximately 50 per cent was achieved straight off the bat. (Thus, highlighting the value of
outsourced versus full-time in-house accounting!)
Our solution
Once we were in situ, it became clear there were even bigger opportunities for us to make an impact beyond saving the client money.
Our first activity was reviewing their current systems and processes, which soon revealed that many of the tasks handled by the former accountant involved non-core activities. In reality, they were tasks done to fill a 40-hour work week, which didn’t add any material value to the business.
By stripping away this unnecessary work and focusing on higher value activities, we made a series of improvements that increased output and impact, while reducing effort.Here’s what we did:
- Refreshed financial reporting – We redesigned the monthly reporting pack to include extra, more pertinent information, concise P&L, cash flow and balance sheet summaries, and simple graphs. This gave the management team a bird’s eye view of performance.
- Simplified budgeting – The annual budget process was overhauled to save time and cut complexity, while ensuring accuracy. This allowed management to focus on decision-making rather than wrangling spreadsheets.
- Cashflow visibility – With cashflow analysis introduced as a core part of monthly reporting, the business finally had future visibility, enabling them to make confident decisions, and see any potential issues before they became a problem.
- Better bank relationship – With clearer reporting and improved communication with their bank, the company bolstered their relationship, creating trust and support when they needed.
The outcome
Despite reducing its accounting hours and costs by half, the quality of their financial management increased. Instead of paying someone to complete unnecessary tasks, the finance team became
streamlined and strategic, giving the management team access to concise, impactful information.
When the time came for the owners to sell, having us on board as their outsourced accountants also meant they had expertise on hand to manage the sale process.
The results
- 50 percent reduction in accounting costs
- More concise, accurate financial reports · Improved cashflow visibility
- Better banking relationships
- Successful business sale
This is a great example of how outsourcing your finance function can deliver more than just savings; it can set your business up for growth, stability and even a profitable exit.
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