Steve’s website design business having started from pretty much nothing had grown rapidly. In next to no time the business was turning over £200,000. Just to keep up with the rapid growth the team had been expanded from 1 to 5.
On the face of it, everything looked great.
BUT there was a problem…
The truth of it was that there was no proper accounting system. Everything was done on excel spreadsheets. These were ok in the early days when there weren’t that many transactions to process.
But as the business steadily grew and the volume of transactions rose dramatically, It got to a point where the excel spreadsheets couldn’t cope. They weren’t fit for purpose for a rapidly growing business.
And it became more time consuming….
The situation was made worse by the fact that Steve did all the bookkeeping himself. He kept the spreadsheet up to date. He manually raised and sent out every sales invoice using Microsoft Word. If he had time he chased customers for payment.
It was exhausting.
And then cashflow got worse….
In next to no time Steve found himself spending more and more time in the office in the evening and at a weekend just trying to keep on top of it all.
The more the business grew the worse it got….
The business soon hit cashflow problems. The manual systems and processes were largely to blame. Sales invoices were sent to customers late. Lots of customers paid late because they were rarely reminded or chased for payment.
Left in the dark by a lack of information
Whilst Steve could sense that the business was starting to get out of control he was completely in the dark when it came to the financial side of the business. The trouble was he didn’t have any financial information about his business.
What he needed but just didn’t have was….
- A profit & loss report which showed him the sales, costs and profit for the month.
- A cashflow report which showed him where the cash flowing in and out of his business was coming from.
- An up-to-date list of customers who hadn’t paid his sales invoices.
Something had to change
It felt that the business had reached a point where it couldn’t grow much more. To break through the glass ceiling Steve needed more time and cash – neither of which he had much of.
He was constantly worrying about cashflow and if there was going to be enough to pay the wages at the end of the month.
This couldn’t continue.
The two simple changes that changed everything
Every business which is serious about growing must have a modern accounting system which is fit for purpose.
The excel spreadsheets and manual processes weren’t fit for purpose and urgently needed to be replaced.
The solution was twofold.
1 Implement cloud based accounting software – XERO was chosen.
A lot of time was spent by the accountants to set it up so that XERO was tailored to Steve’s business. A well thought through and set up system maximises efficiency and effectiveness…which ultimately leads to better results.
2 Delegated all the bookkeeping to his accountants.
This released Steve from doing something he really didn’t like and didn’t have the time for. His time could now be better spent.
He now had a lot more time to work on and not in the business.
The changes made an instant impact
Pretty much from day 1 the new XERO accounting system started to make a noticeable difference. Within weeks, the main things which noticeably changed for the better were….
- All ongoing work sales invoices were now automatically being raised and sent out to customers. This saved a huge amount of time.
- All one-off project work was now always billed by linking time recording software to XERO. This increased sales and profits.
- Increasing numbers of sales invoices were now automatically paid on time by linking direct debit software to XERO. This increased cashflow, saved time chasing customers for payment and eliminated the uncertainty about when a customer would pay.
- Steve now had a lot more time to work on the business – to grow both sales and the profits.
- Steve unsurprisingly now felt a lot calmer and more confident about the future, – the business was more under control and running better. He received profit & loss and cashflow reports so he could clearly see how the business was performing each month. Cashflow now was much better.
And impact over the next 12 months…
In the 12 months after implementing XERO accounting software and delegating the bookkeeping both sales and profit went up.
Sales revenue increased by 10%
Profits increased by 59%
Just by having the right accounting system and delegating the bookkeeping to the accountant meant more time to work on the business and this has truly transformed the business.
