Outsourced Accounting Case Study: San Diego Brewery
Our client, a rapidly growing brewery, had limited to no internal accounting function. The financial information they did have was not reliable, profit margins were unknown, and there was no inventory system in place.
What we were hired to do
Signature Analytics was originally hired to provide the following outsourced accounting services:
- Bring order to the financial information of the brewery.
- Produce accurate and current financial information, including monthly balance sheet and income statement.
What we accomplished
The initial needs of the brewery were to ensure accurate accounting records as soon as possible so that management could make appropriate decisions based on this information. Signature Analytics assigned an industry experienced team to the engagement to ensure quality. Although our team consisted of staff accountant through CFO levels, the immediate workflow required only one skilled individual, an accounting manager, to identify the current situation and begin the clean-up process. Our accounting manager was supported by one of our CFOs and communications with brewery management were ongoing and imperative. This allowed the engagement to maintain flexibility and maintain efficiencies. The initial phase of the process included the following:
- Ensure accurate accounting records by performing a proper reconciliation of all bank and balance sheet accounts.
- Identify and calculate proper cost of goods sold for each product line to assist with margin analysis.
- Implement a system to track inventory.
- Ensure proper GAAP and accrual basis of accounting by matching cost of goods sold with sale of product to properly manage and analyze margins.
- Implement monthly close process with proper review, both to be completed by Signature Analytics on an ongoing basis.
- Implement monthly meeting with brewery management to review historical performance and discuss future activity and projections.
Once the initial phase of the process was completed and the brewery financial information was accurate and complete, we implemented a focused proactive approach by performing the following:
- Implementation of ongoing 13-week cash flow forecast to assist with cash management and payment of bills. Forecast to be reviewed with management weekly to assess performance and enhance adjust model for changes.
- Proactively conduct regular discussions with management to review Key Performance Indicators, current and future events, and historical financial information.
- Establish banking and financing relationships for future financing opportunities.
- Develop annual forecasts and projections.
- Communicate directly with brewery tax advisors to ensure proper tax planning and timely tax filings.
Based on our work performed, the brewery was able to properly identify the margins for each product, allowing the brewery to focus on proper pricing and distribution strategies, thus increasing overall margins and profits. In addition, accurate financial information was able to be presented timely to brewery investors and banking relationships enhancing investor relations and participation. Based on current and accurate financial information, forecasts, and budgets produced by Signature Analytics, the brewery can now properly project EBITDA growth to allow for better cash management strategies.
In the Client’s Own Words