The Effect
‍Furthermore, this inaccuracy led to misinterpretation of the values like Cost of Goods sold and Financial ratios such as Current ratio and Gross profit Margin, which depended on the inventory value. All these values tragically affected the financial health and position of the company. To overcome this problem, the team recommended completing a monthly inventory check of finished goods, raw and packaging materials and updating them on the inventory system created by the accounting firm. All the samples and testers were also tracked regularly within the system to keep a check on them.  

Proposed Solutions
‍Convinced by Al Prime’s accounting team's proposed solution, Pheonyx signed up with AlPrime to eliminate all their financial woes and gain valuable inputs to make their business prosper. Now that they had access to all the financial data of Pheonyx, Al Prime got to work tidying up all the books and accounts. In this quest, Al Prime unraveled some of the hidden issues in Pheonyx’s books that were holding it back from performing at its full potential. So, the team suggested and trained Pheonyx’s employees in the right way to handle each of these issues for the efficient and optimal functioning of the firm.

The Account receivables were not properly tracked in the system. The Business to Business sales were recorded based on the collection, not when actual sales happened.

Ø The team explained that it was improper accounting per the Accrual Concept and would lead to sales being either over or understated monthly. They also showed them how to record sales accurately to prevent this problem.  

The Business to Business customer payments were not recorded with the correct dates by the operation’s team, resulting in an inaccurate receivables balance.

Ø AlPrime pointed out the downside of this method and suggested new and automated ways to record customer payments at the Point of Sale, which was updated in the system automatically, preventing human errors. Furthermore, the new method made it easier to generate monthly reports on time with accurate values.

ManagerialAccounting and Support:
‍AlPrime’s team did not stop there. Just because the problems disappeared doesn't mean the company was performing at its best. Al Prime continued to provide its advisory services to Pheonyx to reach the pinnacle of its business performance. To add to their inventory tracking system, certain adjustments were made every year to address any other unique discrepancies and issues. Items were categorized into slow-moving and best-selling products to understand the customers' preferences. Al Prime also suggested some strategies to deal with items that are Slow moving like bundling with Fast-moving products in combo sales, placing them in new places in the store, or providing some kind of discounts to promote their sales.

Results
Needless to say, Pheonyx is performing much better than the previous years, and all its books are clean and organized. It understood its financial position and made informed decisions to direct its focus and investments toward critical areas that could help the business perform better. Al Prime’s role was not merely to point out the issues to its client but also to provide solutions that were tried and tested to achieve excellence. Managerial Accounting is much more than regular accounting, where the accounting firm travels with the company to identify areas where the systems or processes are underperforming and recommend measures to optimize them. Pheonyx’s Case Study shows the magic of managerial accounting in action and reaping its results in the form of better business performance through the years.