Streamlining Financial Reporting for a Nationwide Plumbing & Heating Company
Introduction
A nationwide plumbing, heating, and ventilating company was facing significant challenges in producing accurate and timely monthly management reports. Despite being a well-established business, they struggled with understanding the financial interaction between Interim Applications, Sales Invoices, and Work in Progress (WIP).
Additionally, the company had difficulties managing accruals for costs incurred on-site but not yet invoiced by subcontractors and suppliers. This led to inconsistent financial reporting, unclear profitability figures, and difficulties in forecasting cash flow.
Josef was brought in to identify the key issues, introduce structured financial processes, and ensure the management team had full control over their financial reporting.
Situation
The company’s inability to produce accurate monthly management accounts was causing delays in financial decision-making and leading to misstatements in revenue, profit, and cash flow forecasts. The issues stemmed from:
- A lack of clarity on how Interim Applications, Sales Invoices, and WIP interacted in the accounts.
- Accrual challenges, where costs incurred on-site were not being captured properly until invoices arrived, creating mismatches in financial reports.
- Unstructured accounting processes, leading to unreliable profitability figures.
- Delayed and inconsistent reporting, making it difficult for the leadership team to make informed business decisions.
Without intervention, the company risked poor financial visibility, cash flow mismanagement, and potential compliance issues with lenders and stakeholders.
Obstacles
- Interim Applications, Sales Invoices, and Work in Progress were not properly linked, leading to incorrect revenue recognition.
- Accruals were not accurately recorded, resulting in an understatement of liabilities and overstated profitability.
- A lack of financial understanding among key personnel, creating ongoing reporting inconsistencies.
- Management reports were often delayed or inaccurate, making strategic decision-making difficult.
Action
Josef worked closely with the finance team, operations team, and external accountants to implement a structured financial reporting framework:
✔ Reviewed the company’s financial reporting process, identifying key areas of misalignment between Interim Applications, Sales Invoices, and WIP.
✔ Developed a structured approach to linking these elements, ensuring accurate revenue recognition and proper tracking of job progress.
✔ Implemented a clear accruals process, allowing costs incurred on-site but not yet invoiced to be properly accounted for in the monthly management accounts.
✔ Worked with IT to generate a profit summary for each job/project, breaking down income and direct costs into categories, along with overall profitability.
✔ Added functionality to manually adjust Work in Progress and cost accruals, ensuring financial reports could reflect real-time project performance.
✔ Ensured integration with the nominal ledger, aligning WIP and accrual adjustments with the Profit & Loss and Balance Sheet, ensuring financial consistency across all reports.
✔ Introduced a step-by-step financial close process, ensuring that all relevant costs, revenues, and WIP adjustments were captured before reports were finalised.
✔ Trained key finance and operational staff, ensuring they fully understood the interaction between financial components and could accurately report on them going forward.
✔ Created a financial reporting calendar, setting clear deadlines for data collection, reconciliation, and report production to eliminate delays and inconsistencies.
✔ Developed a real-time reporting framework, enabling management to track WIP, accruals, and financial performance in a structured and reliable way.
Result
✅ Accurate and timely monthly management reports were successfully implemented.
✅ The company gained a full understanding of the interaction between Interim Applications, Sales Invoices, and WIP, improving revenue recognition.
✅ Accruals were properly accounted for, ensuring that costs incurred but not yet invoiced were reflected in financial reports.
✅ Management reports were no longer delayed or inconsistent, providing leadership with clear and actionable financial data.
✅ The finance team was fully trained, giving them the confidence and ability to maintain accurate reporting going forward.
✅ A fully integrated job profitability summary was developed, allowing for easy tracking of income, costs, and real-time adjustments to WIP and accruals.
✅ Financial transparency improved, enabling better cash flow management and stronger relationships with banks, investors, and suppliers.
Conclusion
Josef’s intervention transformed an unclear and inconsistent financial reporting system into a structured, accurate, and reliable process. By clarifying how Interim Applications, Sales Invoices, and Work in Progress interact, the company eliminated revenue misstatements and improved financial transparency.
Furthermore, by introducing a structured accruals process, the company ensured that all costs incurred on-site were captured in real time, rather than appearing as financial surprises later. This gave management a true picture of profitability and cash flow, allowing them to make informed decisions with confidence.
One of the most significant improvements was the development of a job profitability summary, fully integrated with the company’s financial system. This allowed project costs and income to be broken down by category, with the ability to manually adjust WIP and accruals in real time. By ensuring full integration with the Profit & Loss and Balance Sheet, financial reporting became consistent, transparent, and highly accurate.
Perhaps most importantly, Josef’s training and process improvements empowered the finance team to handle these financial complexities independently. No longer reliant on guesswork, the business could now produce reliable monthly management reports, track financial performance accurately, and maintain control over its financial health.
With better financial visibility and stronger reporting discipline, the company was now positioned for smoother operations, improved cash flow planning, and greater credibility with lenders, investors, and stakeholders. What was once a confusing and unreliable financial process had been transformed into a clear, structured, and effective financial reporting system, ensuring long-term stability and success.
