Introduction
Client D, a cozy Italian restaurant with two branches in Kuwait City, faced challenges with inaccurate financial statements, impacting its financial position. With two branches and a considerable Instagram following, Client D was a hidden gemin the market. It has garnered a good reputation through positive reviews on famous online platforms like Talabat and has paved its way to becoming one of the renowned brands in Kuwait. However, discrepancies in petty cash, receivable, loan, and payable balances marred its financial position. This caused a significant decrease in annual turnover, affecting the company's overall financial standing. Until the firm onboarded AlPrime as its trusted partner to manage its financials, it was unaware of the well it was digging itself into through improper data recording.
The Problem
Client D's financial reports lacked accuracy, leading to miscalculations in expenses and revenue. Al Prime Capital's audit revealed several critical issues affecting Client D's financial health. Petty cash balances were mismanaged, and payable supplier balances did not match with recorded bills. Moreover, staff receivable balances included amounts for departed employees, distorting the expense calculations. Additionally, loan balances were inaccurately recorded, and interest expenses were not accounted for, leading to inflated expenses. Furthermore, Client D failed to recognize interest and depreciation for rent IFRS 16, further exacerbating financial discrepancies.
The Effect
These financial inaccuracies severely impacted Client D's annual turnover, reducing it by a staggering 61,932.99 KWD and jeopardizing its financial stability. The company's financial position was compromised, and urgent intervention was necessary.
Proposed Solution
To rectify Client D's financial woes, Al Prime Capital devised a comprehensive plan to restore order.
1. Collecting and Matching Balances: AlPrime meticulously reconciled bank and petty cash balances from previous periods by confirming with the client and accurately recording omitted bills.
2. Supplier Balance Analysis: The firm obtained detailed statements of accounts from suppliers, conducted in-depth purchase analysis, and closely monitored supplier payments, ensuring smooth inflow and outflow of finances.
3. Receivable Balances Confirmation: AlPrime scrutinized receivable balances from third-party payment methods, ensuring accuracy in financial records and eliminating erroneous staff receivables.
4. Cloud-Based Financial Portal: A cloud-based portal was created to streamline financial and operational data collection, fostering better organization and accessibility.
5. Interest and Depreciation Schedules: AlPrime created precise schedules for interest and depreciation on rent locations, ensuring accurate expense calculations and improving financial transparency.
The Result
Thanks to Al Prime Capital's confident and authoritative accounting expertise, Client D experienced a remarkable transformation. The accounting firm's diligent efforts led to accurate financial statements, empowering Client D with better financial decision-making capabilities. The once-faltering restaurant was now equipped to navigate the challenges of the market with clarity and precision.
Conclusion
The partnership between Client D and Al Prime Capital exemplifies how confident and authoritative accounting can breathe new life into a struggling business. The accounting firm restored Client D's financial stability through meticulous analysis and strategic solutions, paving the way for success in the competitive restaurant industry. Client D's case is a testament to the importance of professional accounting services in promoting growth, ensuring financial accuracy, and propelling businesses toward a prosperous future.
