A Software Development Company which endeavors to turn business complexities into opportunities.

Challenge

They discovered that due to the company's rapid growth, they were falling behind on their bookkeeping and were only performing the necessary tasks. The inventory numbers on their balance sheet didn't seem to be accurate, and they weren't confident that they had set up their QuickBooks accounting database correctly. There was a sizable debt owed to CRA since the company's HST Returns had never been computed or filed.

Journey

Additionally, the inventory assets weren't set up properly, and the cost of each sale wasn't properly passing through to the income statement, causing a bigger gross profit than was actually being made. The decision was made for the part-time Partner to resign from their full-time position and concentrate completely on this new firm based on the figures they had generated from QuickBooks. They also began moving money out of the company to pay themselves bonuses as a result of these figures and the excess cash flow.

Solution

We evaluated their books on-site and offered a thorough list of issues that needed to be resolved with the current financials. One of the largest obstacles was that, as of our beginning point, a bank reconciliation had never been finished since its establishment 15 months earlier. We were able to identify which sales entries needed to be corrected after completing the historical bank reconciliations. In order to ensure that sales and purchases went into the right accounts, we also remapped all of the inventory assets.

Outcome

The proprietors of this company are now aware of their precise gross profit margin. They now know which of their product lines are the most profitable and which they should stop stocking because they have this information for each of their items. Accounts They now submit payable entries on a weekly basis so they can keep track of their cash flow needs and plan ahead for the significant HST liabilities that are due on a quarterly basis. Despite stating that they would not have quit their prior job or given themselves such excessive incentives if they had known the actual sales and profit margin data, they now have the knowledge necessary to pay themselves only what is necessary.