Background
Our client, a software development business, asked us to take over the financial management of the business as the existing part-time finance director was leaving.
Appointment
In March 2009, FD Solutions’ CEO Richard Brooks was appointed CFO supported by Client Finance Director Tim Parfitt. Immediately taking over the reins from the outgoing finance director, Tim initially spent between two and three days a week in the business.
Cashflow management
Although the business had been established for several years, it was essentially a start-up, having very limited revenues but being on the brink of launching a new software product.
With such limited cash inflows, the business was relying on retained cash from a previous shareholder fundraising to meet its day-to-day expenses. Management of cashflow was therefore a top priority and a 13-week rolling cashflow forecast was implemented to demonstrate how long the cash reserves would last.
Forecasting
To support the raising of further funds from existing shareholders, a detailed forecast model was developed. This incorporated known business overheads and predicted sales from multiple channels building from zero to maturity over a four-year period.
The model was constructed to demonstrate multiple scenarios dependent on the level of success at generating revenues. It was summarised by revenue, profitability and cashflow with a month-by-month cash projection over the life of the model.
Completion of statutory accounts
The statutory accounts for the year ended 31 March 2008 had not been completed and an audit had not been carried out by the previous auditors.
As the accounts were overdue and a Companies House fine was looming, the Board agreed that an audit was not required. With board approval the statutory accounts were completed by FD Solutions from internal accounting records, a more complex process than expected due to the incomplete nature of the records. Nevertheless the accounts were completed and filed in time to avoid a significant fine.
Improved management information and accounting processes
Previous management accounts had been prepared from Sage 50 TBs exported as CSV files with journal adjustments on the face of the spreadsheet. These adjustments were not fully reflected in Sage 50 and therefore the accounting records were not consistent with the management accounts.
A new integrated model was built, that used the Sage ODBC functionality to extract nominal ledger balances and ensure better data integrity.
Management accounts included comparisons to forecast of the P&L and balance sheet, a cashflow summary, and a list of new business won each month.
A monthly timetable of accounting activities was established to ensure that deadlines were met.
Product Development
The software solutions being developed by our client were being targeted at accountants. As such we were able to devote internal resources to assisting with product development and testing.
Other tasks
Other ongoing activities have included:
- Completion of statutory returns to HMRC for EIS and EMI schemes
- Preparation of draft corporation tax calculations
- Calculation and submission of an R&D tax credit claim
