Company Outline

A well-established country hotel and restaurant based in the county of Surrey. The business started with a large personal investment together with a long-term financial loan plan. The owners are now looking to develop and grow both the existing business and expand with new revenue streams.

Turnover: £2.1m
Number of staff: 28
Net profitability: 28%

Situation

Over 20 years the business had developed strongly at first with a firm, personal grasp, on every aspect of performance. In the last five years with the expansion and growth of a highly successful business, the increased volume of workload and the need to access management information more immediately, had started to reveal bottlenecks and in-efficiencies in handling financial reporting that delayed decision making and the planning of budgets with late ‘management information’ from tradition accountancy practices and timescales, this together with a widening service range and ensuring a lack of information relating to supplier and tax commitments in real-time was causing financial problems in cash-flow and operations.

With the introduction of additional shareholders from outside the family into the business, it highlighted shortfalls in the systems, and the lack of any accurate, real-time, profit, super normal profit, retained profit, and shareholder dividend and issue reporting creating a lack of transparency between owners.

Due to the delayed reporting upon tax commitments sometimes at times by up to over six months due to normal accountancy industry practices, both a lack of provision for tax commitments, and resulting late payment penalties, were seen as an unacceptable situation.

The business needed to change or deteriorate.

Solution

An overhaul of the way the business was interpreted was initiated with a restructure of revenue streams and expenditure cost centres, followed with creating revenue streams for business segmentation. This created a clear view of business performance.

A new, clear strategy for the accounts backend function of book-keeping was implemented, ensuring accurate, real-time date to report upon.

A full bespoke management information reporting system was written and implemented with a range of KPIs that clearly illustrated performance, allowing instant assessment of where to direct management focus for improvements.

With a live tax and loan commitments reporting, it was now possible to ensure all late payment fees and loan defaults were eliminated.

Finally, with the introduction of budgeted profit and therefore dividend allocations, reinvestment and shareholder dividends were now allocated and maximised for both business and shareholder benefit.

Challenges

The business had evolved over several years, with each compounding the problems leading to a need to address the situation. Both management and staff had become comfortable in an inefficient process with little desire to change or address it.

To achieve the transition the owners were taken through a bespoke programme on business management and financial practices to overcome hesitation about change ensure by-in from the leadership team. They were then supported in taking this down through the business in department discussions showing how change will ensure a better working environment with a more secure financial security for the business.

Managing a high-volume transaction across revenue streams without interruption or delay to financial accountability required running both existing systems alongside the new backend functions and management information reporting system over a period of one month.

Benefits

Results have been vast. Weekly reviews of real-time management information reports have allowed intelligent decisions based upon fact resulting in operational improvements. Revenue and profit have increased, and expenses have been reduced. The bottom line has grown against revenue.

Each quarter shareholders have received improved profit dividends at the same time as the business building a retained profit buffer.

All tax commitments are now dealt with withing two weeks. In the case of corporation tax this result in an interest refund every year.

Products & Services Used

Book-keeping
Payroll and Pensions
Management Information Reporting
VAT
Year End Accounts
Company Taxation
P11D
Company Secretarial
Fee Protection Insurance