CASE STUDY
Optimizing Bookkeeping Practices for a 4X Return

Summary:

ABC Cleaning is a well-established cleaning company that has been in business for just over four years. The company provides a range of services, including both residential and commercial clients. ABC had no clear picture of the company's cash flow, expenses, or profitability, and struggled to keep up with invoicing and payments. Falling behind became a source of stress, especially when the business ran short on cash despite continuing to grow.

By optimizing her bookkeeping practices, Jane was able to get a better understanding of her financial data, improve her cash flow, and increase profitability. She was also able to reduce her stress levels and focus more on growing the business and leading her growing team, while also achieving a 4x return on the investment into bookkeeping and process optimization.

ABC CLEANING COMPANY OPTIMIZES BOOKKEEPING

Client:

Revenue $600,000

Profit Margin 2.73%

Challenges:

As a result of ABC Cleaning's poor bookkeeping practices, owner Jane was facing significant challenges that were affecting the company's ability to make informed business decisions. Jane had no clear picture of the company's cash flow, expenses, or profitability, and struggled to keep up with invoicing and payments. Falling behind became a source of stress, especially when the business ran short on cash despite continuing to grow. This uncertainty made it difficult for Jane to decide whether to focus on more commercial work or maintain a balance with residential work, putting the company's future growth and success at risk.

Other Considerations & Issues:

Jane, the owner, spends most of her time doing damage control instead of leading the organization forward confidently and focused.
The business has experienced a significant bank balance crisis multiple times in the last year, following seemingly strong and profitable months.
The combination of labour expenses for client-related work and overhead has made it difficult for Jane to determine if labour expenses are rising proportionately to their growth, or if she cannot afford additional administrative support.

Solution:

Jane hired Bottcher who helped her immediately adjusted her under-utilized cloud-based accounting system, which streamlined the process of recording transactions and tracking financial data. Procedures that maintained timely and accurate records while also being efficient for Jane to complete while leading her business.

Bottcher reviewed Jane’s Chart of Account structure to ensure that revenue and expenses were being recorded accurately. Labor expenses were split to correctly reflect overhead expenses and billable expenses.
Client invoices were prepared daily based on work completed minimizing billing errors and decreasing average days to pay by 22%.
Timely record keeping ensured the business charge accounts were paid on time thereby reducing interest expenses and reducing unnecessary emails with vendors looking for late payments.
Revenue realization procedures were adjusted to ensure revenue was realized in the correct calendar period to ensure that there was a necessary understanding of the difference between revenue and bank balance. Adjusting revenue realization procedures was essential so that revenue is recognized in the correct accounting period, which is vital to gaining a true understanding of the difference between revenue and bank balance.

Impact:

The impact of optimizing Jane's bookkeeping practices was significant. She was able to get a better understanding of her cash flow and profitability, and she could easily track her expenses and revenue.

Revenue $834,000

Profit Margin 6.27%

Bookkeeping $7,200

Profit After Investment $28,711

4X RETURN ON INVESTMENT

Conclusion:

Hello, I'm Tiffany-Ann, CEO of Bottcher

With a wealth of experience in scaling service-based businesses from start-up to 7-figures per month, we are the ideal partner to help you take your business to new heights. We work with service-based businesses across North America and have a proven track record of success and expertise in the field.

Our approach is focused on delivering clarity, purpose, and a plan, so you can feel calm and confident about the future of your business. We have a team of experienced bookkeepers who ensure that your finances are in order and a CFO style review process that provides expert guidance on how to optimize your operations. With us, your business is in good hands.