Project Overview
A leading multi-site operator (MSO) in the auto body repair industry recently engaged DLC to resolve significant account reconciliation discrepancies following their largest acquisition.
With over 600 locations nationwide, the client faced millions of dollars in reconciliation variances across key accounts due to differences in financial processes and transaction mapping.
The client selected DLC due to our proven ability to resolve complex financial issues and successfully augment accounting staff during periods of transition.
Business Challenge
Following a recent acquisition, the client faced significant account reconciliation variances exceeding $20 million across key accounts, including AR, AP, Accrued AP, and Deferred Revenue.
These discrepancies arose from misaligned general ledger (GL) mappings between the acquired company and the client’s legacy systems, compounded by the challenge of managing massive transaction volumes of over one million GL lines per month.
Limited internal resources and staff turnover further exacerbated the situation, leaving the company without adequate oversight or detailed review capabilities.
Additionally, the complexity of integrating legacy systems with Microsoft D365 ERP added another layer of difficulty.
These challenges not only hindered the company’s ability to produce accurate financial statements for audit purposes but also raised concerns from their private equity firm, particularly regarding future sales and increased audit inquiries.
Approach
Working closely with the client, DLC adopted a comprehensive, phased approach to address these challenges:
1. Initial Diagnosis and Data Review
- Conducted a detailed review of transaction flows from front-end systems (CCC One) to the Microsoft D365 ERP system.
- Identified GL mapping discrepancies between the acquired company and the legacy company.
2. Collaboration and Validation
- Partnered with the Finance and Operations teams to validate findings and understand transaction pathways.
- Periodically communicated with Accounting Management, including the Assistant Controller and Directors, to share progress, financial impacts, and recommendations.
3. Resolution and Process Optimization
- Corrected GL mapping errors to address reconciliation variances, ensuring proper accounting for transactions.
- Took on accounting personnel responsibilities during staff shortages, such as preparing journal entries, reconciliations, and overseeing monthly close processes.
- Developed and documented Standard Operating Procedures (SOPs) and created training materials to ensure seamless knowledge transfer to new hires.
4. Transition and Knowledge Transfer
- Successfully transitioned responsibilities to new staff through meetings, written instructions, and video recordings.
Results
DLC’s expertise enabled the client to overcome significant post-acquisition financial challenges, ensuring accurate financial reporting and enhancing operational efficiency.
The client also experienced the following quantifiable benefits:
- Resolution of over $20 million in reconciliation variances across multiple accounts.
- Reduction in monthly reconciliation efforts by an estimated two days across multiple accounts, saving significant investigative time.
- Streamlined reconciliation processes, eliminating the need for detailed investigations of hundreds of thousands of GL lines.
- Accurate financial statements and reconciliations, reducing audit inquiries and preparing the company for future sales or PE scrutiny.
- Improved transaction processes and clarity, benefiting Finance and Operations teams.
While the engagement has concluded, the company is well-positioned for future audits and strategic initiatives, supported by a stronger foundation in accounting and finance operations.
