Underlying problem 1: Accounts were an absolute mess

The first thing I do when taking on a new client is make sure their accounts are in order and we’re able to use them to make decisions. 9 times out of 10, they are not! This client was no exception. To give you an idea, the main bank account balance was £1m different in Xero to the actual bank balance in the bank, and there were 5 more like this. Therefore we couldn’t trust any of the information in the reports.

Solutions:

Simply, the first month was spent tidying up the accounts – ensuring that the transactions were in the correct boxes, accounted for correctly and we could get the information out that we needed.

Outcome:

Once the accounts were tidy, we were able to provide the owner with information on where the business stood on a monthly basis. We then started doing analysis on various projects they were completing and getting profitability by client, among other things.

Underlying problem 2: Reporting and software

This business was regulated by ATOL, and therefore had to go through certain regular steps to keep their license. However, there was absolutely no process in place to manage any of the requirements. The reporting required trip totals for booked, travelled and future holidays in a quarterly period.

Additionally, the client had no real way of keeping track of client trips, payments and balances to suppliers and from customers and just general customer relationship management. To give some more context, clients may change trip dates, or add things to their holidays all the way through until they came back from their trip, and it became a nightmare to keep on top of, as well as for reporting.

Solutions:

The client already had Salesforce and was paying a lot of money for it on a longer term contract, so the most logical thing to do was get the software working correctly for what the business needed.

So, we came up with a system which allowed us to keep track of the date the client was originally travelling, and then the different costs at various points. This included a naming convention process being introduced and some development work on Salesforce.

We also redesigned the file they were using to manage and report to ATOL, to ensure that it picked the correct trips from the naming convention, worked out when the client was travelling, and then what payments had been made and what balances were due to clients and from suppliers. It then did a check to make sure the information was correct and wasn’t going to flag any errors to ATOL.

Outcome:

It provided the business with a way of keeping track of all the things it needed to keep track of, and took the ATOL reporting process from a days work to no more than an hour every quarter. And, most importantly, the business owner LOVED it!

Underlying problem 3: Covid!

As Covid started kicking off in January to March 2020, clients were phoning in every day and cancelling their trips. Now, a trip was anywhere from £10k to £300k in revenue. As per ATOL rules, if the holiday is protected and the clients wants the money back, you have to oblige. However, the suppliers were based mainly in South America and they wanted paying for part of the trip upfront. Any hope of getting the cash back from them was pretty much nil.

Luckily, the business owner had been very savvy with money and built up a war chest of around £600k. However, this would only last around 3 to 4 months on the current monthly spending at the time, coupled with the refunds they were having to make and the fact that income had gone to essentially zero overnight, from £2.5m per year.

On top of that, travel businesses were going under left, right and centre around us.

Solution:

First thing first, I got a cashflow forecast for the next 3 years in place with an assumption of absolutely no sales for a year. This showed that the business needed to cut costs, immediately.

So, we got to work with the help of the business owner and within a week had cut costs by 85%. This gave 2.5 years of survival with no income, including the worst case scenario with client refunds where the business owner couldn’t persuade them to reschedule for a later date.

We monitored this on a weekly and monthly basis, and as the business picked up again, the trajectory only got better and better, and gave the business a solid foundation to rebuild.

Outcome:

The company is still going! Woop! And it’s only going from strength to strength, with less competition