Trade Business Accountants Case Study
Sales Revenue: $346,016.00
Staff: 1 man band
A plumbing client of ours came to us out of interest in our service, not knowing the situation and position of risk that he was actually in.
He was paying $680 a month for what we call, ‘the typical accountant’, and here’s what we discovered…
Xero (his accounting software) was not being used correctly – only reconciling transactions from bank statements.
The chart of accounts was setup terribly, there was 0 data in their accounting system (No sales invoices? No client data? No expense receipts? No fixed assets?).
Xero wasn’t synced properly with other software in the business, costs allocated to the wrong accounts, accounts not being regularly reconciled – and in turn, our client didn’t have any clarity on his numbers, and he wasn’t compliant with the ATO…
He wasn’t keeping all receipts and his receipt management software wasn’t being used by the accountant properly, meaning the whole process was useless…
He didn’t understand where all his money was going, and he wasn’t sure on his overheads and didn’t know that they were actually sitting at around 50% of his entire business!
And he had $40,000 worth of debt with the ATO, and the accountant hadn’t put in place a plan to tackle it.
Now here’s the big one…
We also uncovered that over the 6 months prior to working with us, instead of making $9,000 net profit, with a few small changes in financial management and decision making, he SHOULD have made $87,470 on top of his salary.
An 866% increase that SHOULD have been his.
So, here’s what we did…
We fixed his entire Xero account, integrated it with other apps in the business, re-structured his chart of accounts to how they should be, re-solved old legacy data, began checking and reconciling everything weekly.
We put in place serious risk mitigation strategies and got him compliant with the ATO, put in place processes and systems for receipt management and the right allocation of expenses, and also payroll.
We got crystal clear on his overheads and advised him on critical spending mistakes in the business, and then developed a plan to dramatically reduce overheads without hindering his ability to operate and grow.
And we began tracking performance against clear sales and profit targets to make sure he was earning the money he should have been…
Now think about your own business!
When was the last time you reviewed your accounts in detail? Ran through the numbers and understood your key KPIs?
Could you be losing out on money that should be in your back pocket?
If you want to maximise the profit within your own trade business, you need management accounting from a team of qualified experts who know what they’re looking for!
Ask yourself, is your current accountant or bookkeeper doing this work with you?
If not, then it might be time to find a new accountant!
If you're an electrician, plumber, painter, carpenter, or any other tradie business owner who is looking for assistance with your tax, accounting, and bookkeeping - click here to learn more!