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Accounts Receivable Reconciliation

Business situation

Our client, a privately held business services company, recently purchased a smaller firm in a related business sector. Subsequent to the acquisition, our client’s corporate controller determined numerous inaccuracies in the acquired unit’s accounts receivable balances.

Project scope

The Robert Half Management Resources Interim Manager analysed the acquired unit’s accounts receivable balances and identified a number of adjusting entries lacking appropriate paperwork, such as sales orders or customer invoices. Further analysis revealed that these adjustments were made in an attempt to capture the balances of a significant backlog of transactions that had not been entered or reconciled in the company’s recently upgraded Enterprise Resource Planning (ERP) system. The total backlog was estimated at over £12 million. The Interim Manager recommended that the client enter all past customer orders and payments received into their new ERP system and then conduct an extensive account reconciliation review to develop an accurate assessment of the acquired unit’s accounts receivable record.

The multistep process involved:

• Entering and validating orders and payments received into the new ERP system.
• Reconciling payments to orders.
• Developing reliable information on accurate accounts receivable.

Initially, two other Robert Half Management Resources interim managers were brought in to help oversee this project. However, due to the magnitude of the task, the project team expanded to eight individuals from Robert Half, including professionals from our temporary divisions. By the end of the project, our team successfully entered, validated and reconciled over £10 million in orders and payments and confirmed that new procedures were in place to ensure similar problems would not arise in the future.

Industry: Business services

Revenue: £245 million

Client's return on investment

After soliciting a bid from its outside audit firm, our client determined that Robert Half Management Resources was the most cost-effective means to rectify the situation.

The revised and reconciled accounts receivable information allowed the client to determine that the acquired business was not as profitable as they had anticipated. Ultimately, the accurate information our interim managers provided assisted greatly in carrying out the due diligence process required to complete the sale of the business unit.

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