£M Engineering company
Accounting, IT and customer problems


Business problems - losses and poor accounting systems
This £M engineering business was the largest employer in its area and it was making large losses. The environment was politically difficult, under close public scrutiny with rumours of fraud. There were staff vandalism, low staff morale, stock shrinkage/theft, poor cash flow and poor IT systems which often did not work. Reliable monthly management accounts could not be produced and the year end was due.

Our solution blended accounting and IT skills with good communications
We found there were several key problems:
·
Informal accounting procedures and weak  financial controls. Therefore sales invoices were regularly disputed by customers. Debtors were high and write-offs were commonplace- all seriously impacting cash flow.
·
A sophisticated unfinished computer system ran very slowly and crashed frequently.
·
Staff faced the pressure of a double workload  - first processing data manually and secondly for the computer.
·
Inadequate communications with customers, staff and the press.

We implemented a crash communications  programme to placate adverse customer, press and union comments by informing everyone what was going on and that the plant was not going to close. We speeded up the computer by removing non-core systems like a huge computational manpower planning tool which consumed most of the computer’s resources. We also quickly upgraded the computer memory and replaced unreliable disk drives. We designed new accounting processes with effective controls  and implemented new monthly management accounts.

Winning results - turnaround losses in 5 months
We reconciled  the manual accounts with the IT accounting systems within two months and switched everyone to the new IT system. The year end accounts and the audit were finished on time.

Morale soared and vandalism ceased as people saw the improvements and the end of their double workload. Also staff realised the business was not being closed down.

Debtors were chased. Pilfering was checked and costs were slashed as good quality management information became available. Customer invoices were accurate and accounted for all men, materials and overhead costs consumed for each customer’s job. Customer satisfaction increased and sales rose. Cash flow was quickly positive.
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