Accounting Outsourcing Case Study
“If we had been required to manage a staff of six people over the last three years we would not have had the time to deal with core accounting issues. . . we would have had to spend more time fighting fires and would have had less time to spend on analytics and to address day to day issues. With IQ we had a template we could overlay for each new acquisition. . . Typically, a company our size just doesn’t have this.” – Sean Simon, Controller
Continental Intermodal Group
Continental Intermodal Group (CIG) is a rapidly growing oil field logistics provider founded in 2013. It provides transloading and storage services for the oil and gas markets in five states across the United States. CIG currently has 13 locations and is in the construction phase for a further three.
Today, CIG’s accounting department uses best practices and its financial capabilities would be the envy of much larger businesses. But it wasn’t always this way. As controller and early employee, Sean Simon recalled, “On my first day of employment we closed three acquisitions, which is pretty amazing. I was handed a checkbook and a Quickbooks file.” CIG continued to grow by acquisition of smaller, independent operators that at that time made up the bulk of the industry. As CIG consolidated market share and received capital investment, the finance team faced the challenge of properly setting up the company’s financial structure while rapidly acquiring operating companies running their own accounting departments, each with their own accounting practices. Most of the firms they acquired were using unsophisticated software and inefficient labor-intensive processes to run the business, from invoices to inventory. With this fast-paced growth, CIG quickly realized there was a need for a different strategy. Simon approached the CFO, Tim Townhill, with the idea of outsourcing the accounting functions. Townhill then tasked Simon with pulling some names together, which led CIG to Ken Johnson at IQ BackOffice.”
CIG Starts With AP Outsourcing from IQ BackOffice
CIG interviewed a number of firms. But IQ BackOffice’s position as a leader in business process outsourcing and its 30+ years of business experience was attractive to CIG, as was its promise of offering 99.97% quality while reducing costs 40 to 50%. Townhill liked that IQ created customized solutions for its clients, which range from boutique to public multibillion-dollar firms. “IQ works with restaurant groups, manufacturers, oil and gas producers, and in many other market segments. IQ has the unique ability to see industry-specific requirements ¬- to understand the fundamentals of effectively processing money in and money out accounting transactions across the industries,” says Townhill.
CIG agreed that the first step in implementing the IQ platform was to establish a centralized system for AP. IQ BackOffice reengineered and standardized CIG’s systems and introduced new technologies and processes utilizing best practices to improve efficiency, controls, and reporting. IQ installed Archimedes, its cloud-based Enterprise Process Management Software, providing electronic routing and approval of invoices and automated coding with a complete audit trail. IQ also provided a dedicated team who resolved exceptions and handled all vendor support. This combination of software and people allowed faster and real-time posting into the accounting system. For CIG the benefits were real and immediate.
Because CIG was growing by acquisition, every acquisition that it made came with an accounting department, and CIG’s board recognized that it didn’t need five accounting departments spread out all over the map. Townhill realized that IQ provided CIG with an elegant way to make quick transitions as acquisitions were made and to centralize the entire accounting operation. It also put less strain on controller Simon, who then didn’t have to train people and worry about inconsistency across the company. With IQ, CIG had a template that it could rapidly overlay for each acquisition. CIG also benefitted as the system was designed with accounting best practices from the ground up.
CIG Likes What They See – Hires IQ BackOffice for Full-Service Accounting Outsourcing
After the successful AP implementation, Johnson made the request to Townhill that CIG should move to Full-Service Accounting (FSA) outsourcing with IQ. After the successful AP experience, the CIG board gave the approval to move forward.
The first step in the move to total outsourcing of accounting was for the Accounts Receivable (AR) department to be re-engineered. Using IQ systems CIG was then able to produce financial reports that accurately reflected the company’s position in real time including accurate cash positions. The days of manually entering customer inventory into the accounting system and matching invoices to payments were gone.
As part of its solution, IQ integrated Intacct with Proplogistics, CIG’s proprietary inventory management system that generated all CIG customers’ bills of lading. CIG’s experience prior to implementation of Intacct with IQ was that the bill that the customer received at end of the month did not resemble their bills of lading. So customers took forever to digest and reconcile the two items. Integrating Proplogistics and Intacct allowed CIG to generate invoices that looked exactly like the customers’ bills of lading. With customer bills identical to what they’ve received and approved throughout the month, customers paid faster. Another benefit of the system integration is that the cloud-based system allows customers to get an up-to-the-minute snapshot of their order from any web-enabled device.
For one of CIG’s ancillary businesses, IQ integrated the QStock warehouse inventory software with Intacct, creating a complete real-time system that can track orders from creation through completion to billing. This process delivers a much more accurate picture of inventory and reduces the time to bill, strengthening the company’s cash position.
The move to outsourcing of accounting operations for CIG came with some unexpected but wholly welcome benefits. IQ was able to leverage and customize the Intacct accounting package for CIG, thus providing a very credible ERP to its various constituents, such as shareholders, bankers, or potential investors. CIG had looked at just licensing accounting packages, such as Intacct or Netsuite, but with IQ it received the team’s best practice services along with setup of the technology for the price of just an accounting package.
CIG believes that the move to full-service accounting outsourcing highlighted one of the areas that really set IQ apart from its competitors: the training and experience of their staff. Remarked Simon, “Even prior to implementation, during requirements gathering, IQ was keen to listen and learn about a new type of business. I can remember drawing whiteboards of silos, trucks, and sand. IQ has almost an academic desire to learn what we do, which was invaluable. It trickled down and we now have people in IQ’s office who can articulate transloading and railcar demurrage.”
Another benefit of CIG’s partnership with IQ was their implementation of governance and internal controls. IQ brought the experience and an SSAE16 Type II SOC 1 framework to create Sarbannes Oxley (SOX) controls documentation-usually only offered by much more expensive services.
As expansion has continued, IQ continues to partner with CIG to reengineer additional accounting processes, to ensure best practices are in place, and to automate processes using both proprietary and existing software. CIG worked with the IQ team to streamline the monthly closing cycle and improve financial statement process timeliness and accuracy.
Now CIG offers its customers a completely automated, cloud-based system, from initial order to delivery, including warehouse inventory tracking. The integration of systems means that reports and analytics are produced in real time and viewable via customized dashboards (see below), which offer the ability to drill-down from a bar chart to see the actual report. Because Intacct and Archimedes are cloud-based systems, employees can access live data and Key Performance Indicators, or KPIs, from any location using a desktop or mobile device, which has enabled CIG to better grow its company, service clients, and contain costs. Simon notes, “As the controller of the business, the real-time reports, dashboards, and operating metrics have been fantastic.” CIG senior management has access to a dozen different dashboards giving KPIs to measure the business. In fact, CIG believes that it has probably decreased the Daily Sales Outstanding by 30-40% because these reports are so readily available and easy to access.
CIG Case Study – Some Final Toughts
Simon’s parting thoughts on CIG’s relationship with IQ BackOffice: “If we had to manage a staff of six people in an accounting group over the last three years we would not have had the time to deal with core accounting issues. The time and effort that would have been required of us to oversee and manage a group of accounting staff would have had a detrimental effect on CIG. We would have had to spend more time fighting fires and would have had less time to spend on analytics and to address strategic activities.”
Learn more about IQ BackOffice
IQ BackOffice, based in El Segundo, California, is a global leader in business process outsourcing, delivering customized solutions for its clients, which range from boutique to multibillion-dollar firms. By re-engineering existing processes, such as accounts payable, accounts receivable, and payroll, IQ BackOffice can offer 99.97% quality while reducing costs 40-50% and shortening the close on financials to three days. Using a combination of Intacct and Archimedes, a proprietary cloud-based software, IQ BackOffice can deliver real-time reporting from any web-enabled device, resulting in better decision-making and stronger financial controls.
Interested in learning more about how IQ BackOffice is crafting innovative solutions to meet complex accounting environments and cost pressures across a broad spectrum of industries (such as restaurant and hospitality, real estate and property management, manufacturing and distribution, telecommunications, utilities, energy, financial services, and professional services)?
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