Success Stories: The client who got a financial makeover

A good deal of the time, business owners don’t recognize potential issues within their company until they become real problems.  By the time those issues are discovered, drastic actions are required to remedy them.

That was the case when Craig was approached by a friend who, bluntly and truthfully told him, “I have no idea how my business is doing.”

A surface look at his financials didn’t present a clear answer.  He was billing plenty, but there just wasn’t much money left in the account at the end of each month.  He couldn’t see where the money was going.

So, Craig dug deeper.

He went through all of their financials for the past two years and found a few areas of concern.  The biggest problems were:

  • All personal expenses were being run through the company.

  • Net wages were being recorded as gross salary (causing a greater tax expense).

  • The company was significantly overstaffed.

  • There were no legal documents.

Complicating the issue was that the client actually had an in-house accountant, and The Bookkeeper was only working on this issue in a consulting role.

A change was clearly necessary but, like many changes, that didn’t mean it would be easy.

At the next meeting, Craig brought all of these issues to the client’s attention.  From there, they devised a multi-step plan to get the company in shape.

First, they took all personal expenses out of the company, so they could get a more accurate picture of its financial status.

Second, Craig went back and corrected the two years’ worth of payroll entries in the in-house accountant had entered incorrectly.

Third, the client reduced surplus staff (including the accountant).

In the end, the client ended up hiring us for his bookkeeping and CFO work (for a fraction of what the in-house accountant was being paid).  There was a great deal of work up-front in cleaning up his financials, but ever since the “makeover”, records have been kept accurate and up-to-date, with no issues or surprises.

Here have been the effects of this change:

  • All payroll expenses are now accurate.

  • The company is staffed at an appropriate level.

  • Monthly expenses have been reduced by $4,000.

Most importantly, the client has peace of mind that he knows exactly how well his business is doing, and no new problems are sneaking up on him.

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