AI Issue 4 2018 - John Harrison & Company

10 Acquisition International - Issue 4 2018 “Labour charges are based on the current payroll with planned changes and overheads are calculated based on a formula which calculates how much the average of each year’s overhead is as a percentage of sales and applying that percentage to the targeted turnover for this year. “It is all then reviewed for reasonableness and the targets are set. The budgeting part of the spreadsheet is linked in to an accounts preparation spreadsheet and that shows the forecast result for the year, a cash flow forecast and forecast balance sheet.” However, the financial industry throws up a lot of issues which the company has to contend with, as John explains. Determined to overcome these issues, John discusses what techniques and developments the firm utilised in order to embrace these challenges and turn them into opportunities. “The next problem was reporting progress against the financial plan in real time. We couldn’t do that if we had to put a lot of labour hours into accounts processing and at that time, and back in 2013, the first automating products were becoming available and we found various pieces of software from across three continents that we could use in tandem to create our system. “The first was some Dutch software which could be used to get purchase and sales invoices into the ledgers automatically. Invoices could be scanned and moved in by drag and drop or emailed directly by the supplier. We would get the business owner to log in at least once each week to approve the invoices then we would ‘post’ them into the accounting system. Best of all the software used ‘face recognition’ software so that the invoice could be ‘memorised’ and for future invoices all of the fields were automatically populated with the correct information. “The accounting software was also Dutch and what I liked about it was that it was multi language, multi-currency, it handled branch accounting and consolidated accounts which allowed reporting in two different currencies. Error correction was also a very simple operation. Sales invoices could be created in bulk or individually and were easy and quick to produce whichever method was chosen.” However, not all aspects of the financial industry have provided a challenge to the firm, although it must be noted that John Harrison & Company has passed every challenge with flying colours. He refers to payment processing being an opportunity, and also why security is an integral part of financial banking. “Payment processing is quite easy, as typically, most clients pay suppliers weekly, so we produce a list of payments that are due and they can either pay them directly or we can produce a BACS file for their bank. “For security purposes, I would not assume or allow my team members access to make payments from a client’s bank account. We found an English software house which had produced software to link to payroll systems to make payroll payments to employees. We adapted that to allow us to send the BACS file to it instead. Our clients could log in to that and release the payments themselves so they kept control of their own bank accounts whilst allowing automation to create all of the payments for them. “Next, we acquired some Australian software which ‘streamed’ each day’s bank transactions directly into our accounting system. Again, there was a process of ‘memorisation’ so that after one transaction had been successfully logged all the others followed automatically.” Significantly, John is proud of the fact that there has not been a single entry which has been typed into the accounting system with a keyboard. He is quick to praise the various types of Dutch software that the firm uses, and notes how he developed a software which encompasses all sorts of financial figures. “Interestingly, the reporting software we use is also Dutch, and it can sit on a business owner’s phone. I designed an 11-line set of accounts which shows sales, cost of sales, gross profit, direct costs, sundry income, admin overheads, marketing expenses, finance charges, personnel costs and net profit. The Balance Sheet is similarly simple and any non- accountant can see exactly what is happening to his business. “A person can view last month, year to date, rolling quarters, and they can even see this year’s figures, last year’s figures and his budget just by altering the criteria for his report. The person can drill down on any of the figures which takes him into the accounting software and they can see all the nominal accounts which make up the figures in the accounts, then he can drill down into the nominal ledger account to see all of the transactions and drill on any of those to see the actual invoices. As such, he can look at any individual invoices that have caused fluctuations in his figures all from his phone while he is on the beach. It’s pretty unlikely that he would be able to do that at all if he went into his office on a Sunday afternoon and certainly not as quickly.” Fully deserving of AI’s recognition, John’s software is no longer unique as other accounting software providers have introduced aspects of his work into their programmes, but this is a great testament to his success. However, the particular software that this firm owns is not easily replicated, and the systems that it has created have ensured that no transactions are typed into its accounting system. He tells us even more benefits of his company’s personal system. “Everything, including journals is either sent into the system electronically or are uploaded in templates created specifically for the purpose so that no keyboard errors can be made. “Additionally, we have methods of quickly supporting all balance sheet values with lead schedules that are updated every month and error correction is a very simple matter as well and level of accuracy is high. “The accounting system that we have created, unique though it was, is now simply a tool that we use in helping business owners build better businesses. Through the analytical work that we do, we are able to identify the critical success factors in any business and then devise key performance indicators to measure them.” Ultimately, there looks to be a bright future ahead for John Harrison & Company. He is quick to praise his team members, and believes they are just as important to the firm as all the accounting software that comes with it. If a system is not used properly by people, then it will not work, and the fact that John Harrison & Company is thriving in the industry is testament to the job that clients do. “Moving forward, we have defined all of the financial systems that we can ‘drop onto’ any business that engages us. We’re now writing people and marketing systems to go with them. The objective is to create generic systems which together with the financial system will give new companies all of the systems they need to run their business with the exception of the operations systems which will be unique to almost every company. However, with the skills we have acquired relating to systems documentation, we can help them write those very quickly. “Lastly, we have taken it as an opportunity and we have created services that can be replicated and up-scaled and seem to be just what many in the small business community actually wants. Throughout my career, I’ve always seen writers saying that accountancy is changing and we have got to change with it. I can honestly say that accountancy has never changed as much as it has in the last four years, and I am looking forward to the future and helping business owners build Better Businesses and create Better Live.”