As part of an M&A process, we undertook a company valuation for a UK-based IT ccompany. In providing this specialist work, the client recognised Alpha Financials’ broad-range of financial expertise and offered us a six month contract to run its finance department. The success achieved during this period resulted in a further seven month contract extension which we are currently operating.
The Situation
The purpose of the contract extension was to further improve profits and cash flows through the implementation of a management accounting process designed to:
- Enhance financial reporting and embed it throughout the business
- Improve the understanding of the profitability of the company’s different services
- Ensure this information was used in an interactive way aimed at constantly improving operational decisions and consequently, financial performance
Services Rendered
- Aggregate information from various sources and produce accurate daily cash flow forecast for a rolling four month period. Regularly refine to further improve the understanding of the company’s financing needs.
- Integrated margins from captive projects and prospects that were close to award, clarifying the minimum performance required to breakeven and the likelihood of exceeding such targets.
- Provide critical support of overhauling and tidying up client’s Sage accounting system by simplifying and reducing account codes, reallocating costs and revenues, updating all reconciliations and ensuring the accuracy of base financial information.
These immediate savings far exceeding the costs of employing Alpha Financials. In addition, the client received the benefit of a full year-end process and improved procedures – all within the six month contractual period and at a cost well below the average costs of a full time equivalent (FTE).
Other gains not as easily quantifiable, but real nonetheless:
- Increased clarity and focus on the key financial measures required to meet budgets
- Improved operational decision making
- Better banking relationships
- More time for the day-to-day running of the business
- Improved credibility towards third parties
- Sounder sleep for the shareholders
