Sydney-based Foodco Group Pty Ltd operates a network of coffee shop franchises. By 2005, the company was enjoying international success, with its Muffin Break and Jamaica
||We looked at a few options and cost was the main thing. Microsoft Dynamics GP was priced very well for an organization our size.
||Jonathon Britton, Financial Controller, Foodco
Blue brands expanding into Asia, New Zealand, and the United Kingdom. Employing 100 staff between head office and its directly owned coffee shops, Foodco knew that the next few years would be a period of considerable growth.
The company’s expansion plans were hindered by its complex revenue model and the way it managed its franchisee accounting. Foodco needed to keep close track of its franchisee sales so it could generate stock invoices. In addition, sales data was used to calculate franchise royalty payments, which constitute Foodco’s main revenue stream. Foodco’s problem was that there was no data link between stores’ electronic point-of-sale (POS) systems and its accounting software.
“We were using an accounting package which had not been upgraded for a long time,” says Financial Controller, Jonathon Britton. “It couldn’t connect with stores’ POS systems, so there was no link between accounts and transactions, and data had to be transferred manually into our database.”
The volume of sales data that had to be transferred was enormous and growing.
“When you are doing that much manual data processing, the accounts system is going to be rife with errors,” says Britton. “We were not able to get our balances to balance. And with the volume of transactions that went through the system, we just couldn’t live with that.”
Management decision making also suffered.
“It’s really important to us to make sure our franchisees are all on track, but we could never provide up-to-date reports,” Britton explains. “We were running a month-end time of 20–25 days every month before we could even get a profit and loss statement. So there was a month-long lag before our management team could react to anything that was happening in the business.”
Change was unavoidable. As Foodco expanded rapidly, the finance team took on greater responsibilities.
“Our workload was increasing exponentially,” says Britton. “Besides the excessive amount of time taken to do the data entry, we were being buried under an invoice mountain.”
In 2005, Foodco put out a tender for a new financial accounting package. After evaluating four potential solutions, the company chose Microsoft Dynamics GP.
“We looked at a few options and cost was the main thing,” says Britton. “Microsoft Dynamics GP was priced very well for an organization our size and it suited our business. The competing solutions were geared towards companies that have manufacturing, whereas we live off our royalty stream. Plus it was more adaptable. We didn’t want to end up buying a whole lot of modules we didn’t need.
“Dynamics GP would also be able to cope with the future company growth without needing us to increase the finance department headcount. Plus it looked as if it would enable us to deliver the reports that we needed much more easily.”
Foodco engaged Microsoft Gold Certified Partner Professional Advantage to implement the new system. According to John Hibbett, Business Development Manager at Professional Advantage, Microsoft Dynamics GP was a natural solution for Foodco because of the complexity of its data needs and the different systems that had to be integrated.
“The key point for Foodco was that Microsoft Dynamics GP is designed to fit with existing corporate systems,” says Hibbett. “Microsoft has developed the package in such a way that it can adapt to the way that companies do business, rather than force them to fit their business to new software.
“Foodco’s major problem was the lack of integration in their accounting systems. Our challenge was to get hold of the information coming out of the stores’ POS systems.”
||The key point for Foodco was that Microsoft Dynamics GP is designed to fit with existing corporate systems.
||John Hibbett, Business Development Manager, Professional Advantage
The implementation was relatively straightforward. Foodco had already built a Microsoft SQL Server 2005 database to aggregate stores’ POS data, and franchisees used industry-standard POS systems. As a result, Professional Advantage encountered little difficulty importing the transactions database into Microsoft Dynamics GP and feeding data directly from the POS systems into the new accounting software.
“The biggest hurdle was getting all the data out of the old accounts system and putting it into a standardized format that Microsoft Dynamics GP could use,” says Britton. “That was a monster task. We did most of the cleansing in-house, just because we are familiar with the data. Then we sent all our files to Professional Advantage. They put together some enormous spreadsheets and imported them into Dynamics GP, so we didn’t have to input the data ourselves.”
Professional Advantage also made sure Foodco’s staff understood how to make the most of the new accounting package.
“Professional Advantage sent a consultant to work with us for two weeks,” says Britton. “She went through all the modules with us and we were able to ask specific questions related to our business. That was much better than being in a classroom where all the questions are generic.”
With all the historic data transferred, Foodco went live with Microsoft Dynamics GP to coincide with the start of the 2005–06 financial year.
Microsoft Dynamics GP made an immediate and dramatic impact on Foodco’s finance department. Foodco slashed financial processing times, eliminated data errors, and gained the ability to generate comprehensive management reports and automatically invoice franchisees.
Slashed processing times
“The new system chopped out a weeks worth of data processing that we had to do to reconcile the general ledger each month,” says Britton. “It eliminated the errors that had plagued our previous accounting setup. Four hundred invoices, which used to be prepared manually from POS data, could now be generated at the touch of a button. That alone saved two to three days.”
Banking is also easier. The system automatically generates electronic funds transfers from accounts payable, which are then sent to the bank. The finance department can be confident that accounting entries are the same as the numbers that are sent to the bank.
“In our experience, Microsoft Dynamics GP allows companies to expand massively without increasing the departmental headcount,” says Hibbet.
||I just like the fact that it works. I don’t need to worry about it. I can come in and am assured that our accounting system works and that it is not going to do something and leave me with loads of errors.
||Jonathon Britton, Financial Controller, Foodco
This proved true for Foodco.
“Since 2005, the company’s headcount has more than doubled and the number of stores has increased by 85 percent, while the finance department is the only part of the business that has shrunk,” says Britton.
Eliminating manual data entry has improved the reliability of financial reporting. “I just like the fact that it works,” says Britton. “I don’t need to worry about it. I can come in and am assured that our accounting system works and that it is not going to do something and leave me with loads of errors.”
Management also gets financial reports faster. Automating data capture from franchisees’ POS systems has brought forward month-end reporting by two weeks. Producing monthly profit-and-loss statements now takes just a week.
“This means management does not take business decisions a month after they need to be taken” says Britton. “In addition, it’s a lot easier to experiment and examine our data. In about 15 minutes, our technical guys can back up the current data to a test database so we can experiment in the system without worrying about messing up our existing data. We use that a lot.”
Integration with office software
The financial reports generated in Microsoft Dynamics GP are also much more useful to the business.
“Microsoft Dynamics GP has been engineered to make it as usable as possible in the work place,” says Microsoft Dynamics Product Manager, Claire Kennedy. “It’s not just a reporting solution. It’s about giving people what they need and putting it in front of them in a form they can use. Finance reporting needs to be accessible to people right across the business, many of whom only live in Microsoft Office Outlook or Excel.”
“Microsoft Dynamics GP provides a familiar interface that works the way people are used to working,” adds Hibbet. “Businesses like being able to produce invoices and management accounts in Microsoft Office Word or Excel because they know how to use them. Because Foodco already used Microsoft Office, staff found it much easier to use their new accounting system.”
“We are able to run all the information in the system flawlessly into Microsoft Office Excel, which means that the people who use our reports can easily customize them,” says Britton. “That enables us to analyze where our costs are heading in each department and identify any overruns. For example, we can now benchmark how our franchisees are performing. And we have the ability to load model budgets. Other departments are a lot happier with the quality and accuracy of the information we give them.”
Advanced capabilities deliver further success
Following the success of using Microsoft Dynamics GP for its Muffin Break and Jamaica Blue franchises, in mid-2006 Foodco implemented the business software package for its JAHNUS subsidiary, a coffee wholesaler.
“We worked out that Dynamics GP would help with managing the company’s backlog of inventory and reconciling multiple currencies,” says Britton. “JAHNUS has a lot of customers overseas and we sell our products in the native currency. We had a real problem with multi-currency price lists and we ended up having to have a separate company file for each currency. We ran them individually and did manual consolidation. It was a nightmare at month end. Now we don’t have to worry about it because the system takes care of it.”
“We are looking to upgrade to Microsoft Dynamics GP Version 10, hopefully within the 2008–09 financial year. I’m also interested in using Microsoft SharePoint Services because of the way it allows you to collate and distribute accounting information. This is very useful for any business, because it means managers can tap into the accounts and find the information they need to see.”
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship, and supply chain processes, Microsoft Dynamics brings together people, processes, and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.
For more information about Microsoft Dynamics, go to: www.microsoft.com/dynamics
For More Information
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For more information about Professional Advantage products and services, call +61 2 9919 8900 or visit the Web site at: www.pa.com.au
For more information about Foodco products and services, call +61 9302 2231 or visit the Web site at: www.foodco.com.au