Here’s how we did it.
It all started during a recent review with a client where we highlighted, with the MD, an issue that we thought may be causing them problems. Internal problems that they weren’t aware they were having. We had noticed that response time from their finance team was increasing, their cash flow was getting worse and the accounts were getting behind.
We felt that they were probably suffering internal issues and noted that it had been a while since they had had a review of their finance department.
We were confident we would find inefficiencies, should we undertake a review. Our Client agreed and this week I visited and undertook a review of the processes, systems and procedures followed by their finance department.
During this review we identified areas that will save them 11 hours per week.
Here is what we found:
| Issues Found | Changes we suggested/made | Time Saving per week |
|---|---|---|
| Client manually downloads the bank statements for multiple banks and uploads them into Xero | Link Xero directly with the bank
Instead, we apply the link to Xero directly with the bank at a cost of £3.50 a month. |
50 minutes |
| Client undertakes weekly cash forecasting. | Monthly Cash Forecast
Instead we recommended a monthly forecast. Weekly cash forecasting is necessary where cash is tight but if it’s ok, monthly is fine. |
15 minutes |
| Purchase Order System – Client manually produces purchase orders and then manually enters purchase invoices in Xero. | Use Xero’s Purchase Orders –
Now instead of a paper purchase order these will be entered onto Xero directly and converted into a bill once the supplier invoice is received. We no longer need the purchase order spreadsheet, we cut down on posting the invoices and speed up purchase order production. Purchase order can now be completed using template items. |
Contracts Department – 120 minutes a week.
Finance Department – 300 minutes a week |
| Supplier Payments made manually one by one. | Implement Batch Payments
Select supplier payments from a list on Xero (once they have been authorised) and batch payment. Upload them up into bank to bulk pay. |
30 minutes |
| Month End Process – Journals | Use Xero’s powerful journal system
Training given on power of journals – repeating and copying etc. |
10 minutes |
| Month End Process – Monthly Reporting | Move to quarterly reporting.
Normally we suggest monthly reporting but in this scenario Quarterly reporting should be tested to save time. |
120 minutes |
| Credit Card – Manually Updated | Get online access to credit cards statements.
Get these in electronic format and upload them onto Xero. |
20 minutes |
| Total Time Saved | 11 hours a week– 44 hours a month. |
Just by tweaking a few internal systems and then analyzing the way things are done, there were massive time savings to be had.
To put the savings in context we saved 44 hours in time – 44 hours @ £15 an hour is £660 a month or £7,920.
At a GP of 35%, they would need to make sales of £22,628 to make the profit to pay for this overhead.
Many of these savings were helped by our client’s use of Xero but our review proved you can have the latest software but if you aren’t using it correctly, then you probably aren’t getting the most out of it.
When was the last time you reviewed the way things are done to see if you could be working smarter and not harder?
