Case Study: How One Year No Beer reduced bookkeeping time by 63%

CAUTIONARY NOTE

This case study is unique to this client. The project duration, project costs, productivity gains, cost savings, and return on investment in this project cannot be taken as an indicator of what might be achieved in a different client setting. The costs and benefits in another project could be higher or lower.

THE CLIENT

Sector – Healthcare

The business provides membership subscriptions to their software platform which gives the customer access to coaching, community support and exercise programmes to support a healthier lifestyle by changing their relationship with alcohol. The company also sells branded merchandise.

THE PROBLEM

The client ran several independent cloud-based applications that were not connected. These included Xero accounting software, a CRM and subscription sales platform, an e-commerce platform, email, cloud storage and payment solutions. To move data between the platforms required manual intervention. This was time consuming and error prone.

OBJECTIVES

The overall objective was to streamline bookkeeping processes around purchasing, sales processing and payments and ensure relevant business systems feed data automatically into Xero. The client needed to prepare for a predicted 10-fold sales increase over a period of 3 – 6 months. They also required improved control and productivity around processing purchase invoices, receipts and expenses; to prepare for UK VAT and EU MOSS VAT registration, and submission of returns; to connect other business processes where possible to increase efficiency and reduce errors in data entry; to enable more timely reporting and forecasting of financial performance.

THE PROJECT PLAN

In order to minimise the impact on the normal running of the business, the project was split into overlapping sprints. Each stage was broken into phases to assess the current workflows and recommend appropriate solutions, implement solutions and test scenarios and review implemented solutions periodically to ensure fit for purpose.

Payment processing workflows

The Problem:

The client had recently started using Xero accounting software and minimal functionality had been set up. All financial administration processes were manual and there was no automation in place. Bank and Paypal transactions were being manually uploaded into Xero. Debit and credit card transactions were being deposited as bulk payments (multiple invoices and fee transactions in one payment). Debit card, credit card and Paypal fee transactions were being manually uploaded as purchase transactions.

The Solution:

1. Implement automated transaction line feeds for all bank accounts by introducing automated bank feeds (a standard feature in Xero).
2. Implement automated transaction line feeds for payment solutions, by introducing an automated line item feed extractor (sales invoices and fees separated) for debit/ credit card payments.
3. Use cash coding for fast coding of fee transactions.

Applications:

SilverSiphon  

Accounts Payable (Purchases) processing workflows

The Problem:

There was no process in place for ensuring that all purchase invoices, receipts and director expenses were captured for payment and receipts were stored adequately. Data from purchase invoices and receipts had to be entered manually into Xero. Expense receipts for business related purchases by directors were often lost or discarded accidentally and not reclaimed.

The Solution:

1. Create an automated system for processing and storing purchase invoices and receipts. This was achieved by creating automated workflows from email accounts receiving purchase invoices and receipts to an Optical Character Recognition (OCR) application to digitally read the financial data and transcribe it into purchase invoices in Xero, with all the relevant financial information and a digital copy of the original.
2. Implement a controlled pre-paid director and staff expense card system which tracks expenses, reminds the user to make a digital record of the purchase (immediate prompt to take a photograph) and seamlessly integrates with Xero as transaction lines.

Applications involved:

Gmail, ReceiptBank, Pleo

Accounts Receivable (Sales) processing workflows

The Problem:

Due to the high number of digital transactions and the lack of direct communication between the sales channels and accounting system, processing and reconciling sales transactions was entirely manual. The company also needed to plan for UK VAT and EU MOSS VAT registration which would require more timely processing and threshold monitoring. Any increase in sales would make the existing process unmanageable for the bookkeeper.

The Solution:

1. Automate sales invoice creation and payment reconciliation in Xero from e-commerce solutions and implement an EU VAT MOSS compliant monitoring solution, to produce sales invoices in the customer’s home currency and correct VAT applicable to that country.
2. Implement “Find and Recode” workflows for mass recoding of sales to specific nominal codes within Xero where necessary.

Applications involved:

Infusionsoft, Shopify, Quaderno, Zapier, Paypal, Stripe

Reporting

The Problem:

Due to lack of timely data transfer and connection between the different business applications, extracting useful and accurate reporting information was difficult and involved delays.

The Solution:

Enable reporting functionality in Xero.

Applications involved:

Xero Reports 

“Once we focused on that part of the business and Kelly started to implement all these changes, suddenly we saw the results – the reporting, the improvements in processes, the reduction in costs and staff now required to run the business, and really just the smooth running.”

Ruari Fairbairns, Co-founder, One Year No Beer

PROJECT SUMMARY

• At the outset of the project it required 4 minutes on average to process each transaction. At the time of completion, it required 1.5 minutes on average to do so. This represents a 63% time saving.
• At the time of completion of the project, the monthly saving in bookkeeping cost was £2826 (based on a bookkeeper paid £22 per hour) which equates to 32 hours per week.
• The project fees were £9179.
• The additional applications incurred monthly fees of approximately £110 per month.
• The estimated total savings over three years are £79,377 (from the date of commencement of the project).
• This represents an ROI of 765% over 3 years.

CAUTIONARY NOTE

This case study is unique to this client. The project duration, project costs, productivity gains, cost savings, and return on investment in this project cannot be taken as an indicator of what might be achieved in a different client setting. The costs and benefits in another project could be higher or lower.