Case Study

Owner / Manager - SME

For a number of years, John, who runs his own professional services company in Dublin, had tried to find an accountant /bookkeeper who could both look after all the day to day requirements of invoicing, collecting money, paying bills and salaries etc., as well as give some input and guidance to the on-going development of the Company.

John knew his own Engineering business inside out and he had built it into a thriving Company employing 20 professionals with a wide range of skills, but accounts were not his thing! Getting the job done and meeting the Client’s needs was never a problem, but he knew he needed someone to follow up on invoicing, cash collection and making sure there was enough money to pay the salaries at the end of the month. He had tried everything!

His first accountant had his head in the clouds and talked all the time about investments and takeovers, about buying their own building and looking overseas for new markets. Unfortunately, he wasn’t so good at the day to day and, after 3 months, there was suddenly a cash crisis and John had to run down to the bank and get an additional overdraft. That was pulled around, after John insisted that all Sales invoicing be brought up to date, but, unfortunately two months later the accountant went for two weeks holiday forgetting to arrange to pay the salaries before he went. That was enough embarrassment for John, and they parted ways.

John then decided that he needed someone with more practical skills so he employed Emily who had a number of year’s bookkeeping experience and came highly recommended. Emily got to grips with the day to day very quickly, she said it wasn’t difficult. Cash flow was under control and the bank balance started to rise. Emily had experience in a law office, where she chased delinquent debts for clients, so credit control wasn’t a problem. She also liked to squeeze suppliers as hard as possible, so she took as much credit as she could get away with…even from the Revenue. “Cash is king” she’d regularly chime. Her one drawback was that she didn’t know how to produce a set of management accounts.

John didn’t think this a problem until his Accountants came in to do the audit three months after his year end. Their first draft accounts showed a substantial loss for John. He couldn’t understand it, he realised that he had lost some customers during the year (one had even blamed that so and so in your office who keeps hounding me for money!), but he thought that things were OK. “Sure wasn’t there more money in the bank than ever before?”. It was only after the Auditors explained that although he had cash, he owed a small fortune to his creditors and the Revenue were threatening action over unpaid PAYE and VAT, not to mention the interest and fines that they had levied. Emily left shortly after justifying her short notice by saying “you just can’t please some people!”

Following this, John had to initially employ a temp from his Auditors office and then had a succession of people who stayed for a while and then moved on, to bigger jobs or places where there were more people in the office to socialise with. He reckoned at one stage he could budget at least 15% more on his Accountancy dept salary charge each year for recruitment agency fees. It became a nightmare, going through the same handover routines year after year and then the Auditors always wanted more money because the present accountant knew nothing about last year!

One evening, John was bemoaning his lot to a friend, complaining that he had discovered his latest protégé had been at an interview up the road during the week. His friend listened to his tale of gloom before asking if he had ever considered outsourcing. John wasn’t quite sure what he meant but he replied “Isn’t that something that big firms do?”. John’s friend explained that he had never employed a bookkeeper or accountant, he had always used AbaKus Outsource .

He explained, that when he started he didn’t even have an office; he worked out of his car. Every Friday evening he would put a list of the work he had completed during the week in an envelope, together with any cheques he had collected and any invoices he had received during the week. He’d drop these into AbaKus ’s office on the way home and they’d look after everything from there; they sent out the invoices and followed up the cash; they sent him out a list of payments that they recommended, based on how much he had in the bank, and they managed the cash flow so he could pay himself a salary at the end of the month.

“Better still” he said “at the end of the month they could tell me if I was making a profit and give me some advice as to what I needed to concentrate on. “As you know” he laughed “ after four years we’re nearly as big as you guys, and we’re still using AbaKus for all our accounting needs. By the way, did you not know that Company’s of our size don’t need to have an audit any more, if you keep things up to date with the CRO, AbaKus can look after all your filing needs and cut out that cost as well”.

After this conversation two year’s ago John contacted AbaKus and we now look after all of his accounting and related administration. Every month he receives a set of management accounts which he discussed with his account manager who helps him make decisions about the future. He no longer worries about what might not have been done because he knows that there is always someone looking after his case and this service is never interrupted for holidays, sick leave or ad-hoc absences.

Lesson from experience
SME’s can usually only afford one or two dedicated in-house people in their accounting /administration function, the slack and worry is usually taken up by the Owner Manager. AbaKus provide a range of skills across different professional levels as a package to support the Owner Manager so that S/He can focus on the business that they know best.