Migration, Invoices & Other F&A Challenges

Introduction

When it comes to casual dining, there is one brand, one company in fact, that has been synonymous with a home-style dining. This company handles most of the Philippines most loved restaurants and has been a staple name in the food industry.

The company, a Filipino owned company, has been in business since the 1970’s. And since that time it has become one of the most enduring brands in the competitive world of food service.

When it comes to casual dining, there is one brand, one company in fact, that has been synonymous with a home-style dining. This company handles most of the Philippines most loved restaurants and has been a staple name in the food industry.

The company, a Filipino owned company, has been in business since the 1970’s. And since that time it has become one of the most enduring brands in the competitive world of food service.

Due to the success of the company, it expanded and bought other brands garnering a total of 9 other restaurant names under the company. All these restaurants were grouped under one legal entity, which in turn the Res(Restaurant Company) has been thriving and ever growing in the market.

But, being large had its consequences. The Restaurant Company had to upgrade its systems relative to the processing of its financial statements. This meant having to manage the influx of invoices and purchase orders in a more efficient manner.

Due to upgrading the system, the company experienced a major delay in drafting its financial statements. The culprit was due to the back log of the invoice and purchase order database.

Another reason as to why updating the database of their new system was necessary was so that they could provide their financial statements to their board of directors on time as well as the compilation of the yearly financial statements on time for the auditors.

With that being said, it was crucial for the systems to be updated in order to get Restaurant Company’s financial statements back on track by updating and migrating from the old system to the new system. If this wasn’t done, then the delay could result in the restaurant Company being left behind in the filing of its monthly financial statements. But, this wasn’t the only challenge. A lot of employees, specifically those from accounting, were resigning from the company.

One thing, however, was crystal: the Restaurant Company had to continue its business despite a growing number of employees resigning from the company.

The business had to continue despite attrition. There was a need for the knowledge of the new financial and accounting processes of the Restaurant Company to be turned over efficiently to the new employees of the company so that there would be no disconnect.

Due to the challenges that Restaurant Company faced, CPI Global Solutions came into the picture.

Objective

The primary objective of CPI Global Solutions was to act as a data and information storage manager of the company to migrate approximately 10,000 invoices and purchase orders to the new system of the Restaurant Company and finish the job 87.50% faster than without CPI Global Solutions’ assistance.

The secondary objective was for the Restaurant Company to continue being able to forecast its financial status and plan using the financial statement through the use of CPI Global Solutions’ services to provide auxiliary support to the company as their problem in turnover is getting rampant with the growing number of employees designing the company, especially in the Finance and Accounting Department.


“…migrate approximately 10,000 invoices and purchase orders to the new accounting system of [the company]…”

Scope or Limitation

CPI Global Solutions, in this project, would provide a total of eighteen full time equivalents (FTEs) to the Restaurant Company broken down to the following tasks:

     a.  Ten full-time accountants – Backlogs of the invoices and purchase orders of the company (order-to-cash and procure-to-pay)

     b.  Eight full-time accountants – Financial and Accounting Analysis (record-to-report)

     c.   Assess and analyze the current processes of the company to be able to reengineer and provide a better and more efficient procedure to the Restaurant Company’s processes.

All employees outsourced to the site of the Restaurant Company will only work for eight hours a day, five times a week.

The Restaurant Company’s Current Situation

  • The Restaurant Company was migrating the data of January 2012 – July 2012 to the new system of the company.
  • The Restaurant Company was delayed with providing the management with a financial statement.
  • They were also rushing to have everything done as soon as possible because the company was being audited.
  • The Restaurant Company had to process an estimated number of 10,000 documents to the new system.
  • The company was experiencing a major problem in employee retention, especially in their Finance and Accounting Department.
  • The transfer of knowledge of the new system and processes of the company had become a challenge due to attrition.



“[The] problem of the company was the growing attrition rate that hindered the transfer of knowledge.”

Problem Statement

The Restaurant Company was faced with two major problems.
The first problem of the Restaurant Company was that its credibility may be questioned if it would be given a “non-compliance” remark by its external auditor if the company could not provide the necessary financial statements for the year.

The second problem of the company was the growing attrition rate that hindered the transfer of knowledge. This contributed to the worsening of the challenge above.

Issues faced by the Restaurant Company

  • The issues that arose from the project was that the invoices and purchase orders of the company were not all complete.
  • There were mismatches in the reference numbers in the invoices and purchase orders.
  • Some of the documents didn’t have any amount/pricing and the quantities did not match the documents.
  • Attrition rate in the company was getting higher thus turnover was becoming difficult.
  • Turnover of knowledge in the Finance and Accounting Department had become difficult due to high attrition.

Analysis and plans to improve processes to achieve desired result

For the first contract, CPI Global Solutions provided ten accountants who manually converted all unprocessed invoices and purchase orders to the new system of the Restaurant Company. By providing accountants, the Restaurant Company was able to speed up the process of updating its system tenfold. The service of CPI Global Solutions was able to migrate the data from the old system to the new system within 5 months and garnered a passing rate from their external audit by January 2013.

Another repercussion was that the Restaurant Company’s purchasing office (PO) and upper management wouldn’t be able to financially plan and forecast for the company as well as be penalized for being “non-compliant” by its external auditor because the only available financial statement is only 33% of the whole company’s progress.

For the second contract, CPI Global Solutions acted as a substitute for turnover for the Restaurant Company. Since the attrition rate of the company, especially the finance and accounting department, was getting higher, CPI Global Solutions studied how the previous accountants did things. This made the turnover to the new accounting employee smoother.

Through the outsourced team of CPI Global Solutions, Financial Statements of the company was up to date and allowed the Restaurant Company to stand on its own 5 months after the second contract was implemented. Because of CPI Global Solutions assisting and acting as the turnover substitute of the company, the process of providing a timely financial statement and to stabilize the company’s finance and accounting department became 87.5% faster. Along with providing the company assistance in their business-as-usual functions, the outsourced FTE’s of CPI Global Solutions reassessed the company’s processes to reengineer it and make their work more efficient. This would not have happened if CPI’s services were not rendered.

Conclusion
The efforts of CPI Global Solutions resolved two major problems of the Restaurant Company. These problems were the following:

  1. The Restaurant Company needed to migrate its old system information to the new system that it acquired.
  2. The attrition rate of the Restaurant Company had been increasing and customary or business as usual processes were being compromised.

CPI Global resolved the above by using the following approaches:

  1. For the first issue, CPI Global Solutions provide skilled accountants to manually update and migrate information; and
  2. For the second issue, experienced accountants were deployed so that their current financial and accounting was analyzed and reengineered to be more accurate and efficient as compared to their previous processes.
  3. The outsourced FTE’s also provided support in assisting in the continuity of the finance and accounting work. This also allowed the transferring of knowledge to the new employees smoother and more efficient.

With the services that CPI Global Solutions provided, the Restaurant Company was able to make full use of their new system, update its data and resolve the back logs by 87.5% compared to if this was done by the Restaurant Company alone. This helped them in reducing further cost and maintained the company’s quality assurance record, provided by its auditors. The work that would have been done in a span of forty months was reduced to just 5 months by CPI Global Solutions.



The work that would have been done in a span of forty months was reduced to justfive months by CPI Global Solutions.

The Restaurant Company’s financial and accounting processes were also not stalled nor hindered despite losing several of their employees. Its business as usual functions did not stop and once the company was able to stabilize, the transfer of knowledge was smoothly done.