Case studies: the question, the numbers, the decision

The team managed projects it could not read in the accounts

The challenge

ETP Sicó had projects under way and a team managing them day to day, but without a shared way of reading the numbers, monitoring delivery and identifying risks before they turned into problems.

What we did

We delivered 90 hours of consultancy in financial management, control and risk, with Marisa Santos. The programme was adjusted along the way to the real projects of the organisation, and it left behind a Financial Management, Control and Risk Manual with the tools the team now uses.

How we worked

The consultancy was not a course delivered straight through: it started from the weaknesses the team identified and found, for each one, the tool that answered it. In the words of the participants, it “identified our weaknesses and went straight to the point, providing the necessary tools”, and “the fit with our context” was what they highlighted most. Written procedures and control instruments were left in place and continue to be used now that the consultancy has ended.

What changed

In the final survey, the seven participants gave the consultancy the highest score and all of them said they now feel more confident in the development of the project.

Sales went up every month and less and less was left over

The challenge

Turnover was growing, but the bank account was not keeping pace. The managers could not see where the margin was going.

What we did

We organised the information by product line and started analysing costs and margins with the managers, in regular meetings.

How we worked

We started by separating sales and costs by product line, using the information the company already had. In the meetings that followed, we looked at each line with the managers: what it sold, what it cost and what it left. The decision to cut was theirs, with the numbers explained.

What changed

The company stopped selling the items that were making a loss and started deciding its purchases with the numbers in front of it.

They wanted to hire and did not know whether they could

The challenge

The team was at full stretch and there was work for one more person. What was missing was knowing whether cash flow could carry the cost over the year.

What we did

We calculated the full cost of the hire and its impact on cash flow, month by month, before the decision was made.

How we worked

We put the salary, the employer contributions and the other costs of the position side by side, and set them against the money expected in and out over the following months. The managers saw in which months cash flow would be tight and chose the date with that map in front of them.

What changed

The hire went ahead with a set date and no surprises: the managers knew how much it would cost and when.

Year-end closing demanded far more hours and the team was the same

The challenge

In the peak months, the firm was not delivering with the necessary rigour, because it did not have the capacity for the work it had on its hands.

What we did

We reinforced the team with finance outsourcing during the peak, working on the accounts of the clients of the firm, in its name.

How we worked

We agreed with the firm which accounts would come to us, under what rules and for how long. The work was done in the systems of the firm and in its name, and it ended when the peak ended. The clients carried on dealing only with the firm.

What changed

The closing was done on time, the client portfolio stayed with the firm and the team did not need to work overtime.

Sales were good every day but the money always arrived late

The challenge

A large share of sales was co-funded by the State and was only received weeks later, while suppliers were paid on delivery. The pharmacy was profitable on paper and short of money in the bank.

What we did

We built a cash flow map with the real dates of receipts and payments, and separated the margin by family: prescription medicines, over-the-counter products and dermocosmetics.

How we worked

We started by working out when the money actually came in, sale by sale. Then we set that against the calendar of supplier payments and the stock purchases. The map is now reviewed with us in the regular meetings.

What changed

The managers started negotiating payment terms with suppliers with the numbers in hand, and deciding purchases by looking at cash flow, not just at sales.

They wanted to open a second location and needed support

The challenge

The clinic had a full diary, agreements with insurers, private clients and group classes. The managers did not know which of these services left a margin and which only took up a room.

What we did

We separated the results by type of service and by agreement, calculated the cost of each treatment room hour and reviewed the VAT treatment of the new services before they were launched.

How we worked

The services of a clinic do not all have the same tax treatment or the same margin. We put each one on its own line, with what it bills, what it costs and how it is paid. The conversation about the second location became a conversation about concrete numbers.

What changed

The managers found out which services sustained the clinic and decided on opening the second location with a cash flow plan, instead of an impression.

Very good months, months with nothing coming in, and taxes always at the worst time

The challenge

Commissions came in fits and starts, as the property sales completed. The taxes and the commissions owed to the agents fell due in the weak months, and the managers never knew how much they could count on.

What we did

We made a cash flow forecast from the deals in progress, set up a monthly reserve for VAT and for corporate income tax (IRC), and organised the withholding tax on the commissions paid to the agents.

How we worked

In a commission-based business, the bank balance is misleading: part of it is tax and part belongs to whoever brought in the deal. We separated those three parts as soon as each commission came in, and reviewed the forecast every month.

What changed

Taxes stopped being a surprise. The managers now know, each month, how much of what came in really belongs to the company, and use that to decide when to take on another agent.

They had more orders than they could handle and did not know which ones made money

The challenge

The factory was working at full stretch and the result for the year was not keeping pace. Prices dated from earlier years and nobody knew how much it actually cost to produce each product family.

What we did

We calculated the cost per product, with raw materials, labour and machine hours, and the margin per customer. We also assessed the purchase of a new machine, with its financial and tax impact and the grants the company could apply for.

How we worked

The work started from the accounting the company already had, reorganised by cost centre. With the cost of each product in front of them, the conversation with customers and with the bank changed tone.

What changed

The board revised the prices of the orders that did not cover their costs and went ahead with the investment with the financing defined from the outset.

The lorries never stopped and, even so, the margin did not show up

The challenge

The company was invoicing more and more, with fuel, tolls and driver expenses in several countries. It did not know which routes paid off, and it had VAT paid abroad that was never claimed back.

What we did

We calculated the cost per route and per vehicle, organised the refund claims for the VAT paid in other countries and reviewed the treatment of driver expenses and subsistence allowances.

How we worked

We brought together on a single sheet what each trip billed and what it cost: fuel, tolls, driver and wear on the vehicle. The refund claim for foreign VAT now has a calendar and a person responsible.

What changed

The managers renegotiated the routes that did not cover their costs, and the recoverable VAT is now claimed regularly, instead of being forgotten.

They sold abroad and always had money tied up in VAT

The challenge

The company bought in Portugal with VAT and sold abroad without VAT. The recoverable tax kept building up, the documents proving the goods had left were scattered, and cash flow suffered.

What we did

We organised the documentation that proves the goods have left, brought up to date the returns specific to those who sell abroad and started claiming the VAT refund regularly.

How we worked

Those who export almost always have VAT to receive, and each refund claim calls for the right documents. We set up a simple routine: each sale closes with the proof of exit filed, and the claim goes in on time.

What changed

The VAT money stopped sitting idle and cash flow became predictable. The managers started accepting larger orders knowing the effect they would have on cash.