Upgrading the systems of a distributor
|Introduction||We are frequently asked to help out with one problem only to find that it masks some others. Here is a recent example.|
|The apparent issue||Our client is the largest independent bathroom and kitchen distributor in the UK. Following a sale to private equity, Mark Guilford was appointed to help to prepare the year end accounts and to smooth the handover from the outgoing Group Financial Director to his successor, who had been identified as the recently appointed Financial Controller.|
|The real issues||During the short handover by the departing Group FD, it became apparent that there had been significant staff turnover in the finance department, and that internal controls had been allowed to slip. This was especially significant because the company was heavily reliant upon a bespoke in-house accounting, sales order processing and stock system, which was becoming increasingly unstable. A replacement system from Sage had been commissioned by the former Group FD, but had not been implemented.|
|Our solution (1)||Mark assumed responsibility for all historic accounting matters, and asked the Financial Controller to focus on current business issues, including the Sage implementation project. Together they recruited additional members of the finance team.
He re-established a system of internal controls to ensure accurate accounting output from the legacy systems, and, with the Purchasing Director, found a significant volume of credit notes and rebates which were due to the company from its suppliers.
Draft financial statements for the trading company, and consolidated financial statements for the group, were prepared to the satisfaction of management, investor, HMRC and auditors.
Throughout the assignment. Mark has held weekly progress meetings with the MD, and monthly progress meetings with the Chairman, to appraise them of milestones achieved, and tasks remaining to be completed.
|Our solution (2)||The new Sage-based accounts are now reliable. In order to complete the task and make them accurate, Mark is helping to prepare for the first physical stock count. Aware of the costs of this exercise he will create a system of perpetual inventory counts.
Mark’s daily tasks are complete but the flexible service will continue as he mentors the Financial Controller as she progresses into her first FD role.