My time at an F3 racing team was an interesting one. The previous finance manager had been in the business 10 years and was not an experienced manager.
This had caused some staff morale issues which were easily fixed with some solid ground rules and support. The bigger issue, however, was the processes and controls in the business, as well as general financial visibility and management reporting.
The first, immediate concern was the stock control and consumable systems were non-existent which caused real issues with their yearly financial audit. I found and oversaw the implementation of a system which would allow the engineers in three different buildings to book their own stock and consumables in and out, on a real time basis and then feed into the accounting system, ensuring the stock and consumables values would always be correct, or as close to as possible, reducing the need for constant stock takes and a much easier yearly audit for everyone involved!
The accountants were not helpful and didn’t have much knowledge of the industry, so my next step was to change to a dedicated industry specialist who had more specific and up-to-date information and advice when it came to questions or issues with their financials.
In the meantime, I got the accounts up to date and went to work analysing them. It turned out the business was making in the region of a £500k loss per year. A lot of this was due to an incredibly high travel spend plus constantly increasing payroll costs with percentage increases that made no sense. It turned out there was no control or process around pay-rises, and staff were taking advantage of the good nature of the business owner who would agree to pay-rises at the side of the track without checking whether the business could afford it, the real percentage of the increase, or whether they were truly deserved rises. With this in mind, I explained what was happening to the owner and put in place a pay change and authorisation control to stop the issue happening going forwards.
Finally, travel. The root cause of the loss in the business. It became very clear very quickly that the issue was that team managers were booking the travel for their team, and, on top of everything else they were responsible for, this was usually a last minute thought. One example is a 5 night stay at a well known hotel chain, at £400 per room per night, with 8 rooms for the team. I found rooms at another well known, and arguably better quality hotel chain for £150 per room per night and closer to the track. Off the back of this revelation, I insourced the travel management and because we already had a race calendar, we were able to book rooms earlier and in bulk which enabled the business to demand better rates from suppliers.
Travel spend by some of the managers was also very frivolous and running up enormous bills, where others scrimped to save every penny their team spent. I implemented travel spend limits meaning everyone had the same budget to spend while they were away on business and the guidelines were clear. This meant we were able to predict future spending and ensured no-one got preferential treatment with their receipts.
The outcome for all this work is a £300K increase in profits, or rather a loss decrease as a direct result of the travel arrangement changes.