Historic Backlog Accounting

Catching Up on Historic Backlog Accounting

It is the best decision to keep your accounting accurate and up to date, so you always know where your business stands, and you can make the right financial choices. If a business delays bookkeeping or does not do it accurately, then it ends up relying on assumptions instead of making decisions based on actual and reliable financial data. Historic backlog accounting can significantly impact a business’s ability to keep control of profits, remain in compliance with taxes, and gain investor confidence. For growing businesses, especially the ones with several branches, like the one in our case study, it is not just about cleaning up old records. It is a smart move that helps the business stay in control and move forward with confidence.

Client Background

Our client is a comparatively new company operating in the transport and logistics sector. They run a fleet of vehicles and offer transport services within cities and between cities across the UAE. In just two years, they grew quickly and opened three branches in different areas of the UAE. As the business started to expand, things got more busy complex, and they left the accounting part behind. Soon, they realized they had no visibility into the revenues, expenses, and profits generated by each branch and vehicle, whether they were complying with VAT and Corporate Tax laws in the UAE, and most importantly, where the cash was going?

Challenges Faced in Backlog Accounting

The client approached us with a backlog of financial data, all the way back when they first started the business. Unfortunately, proper bookkeeping had not been done since their first day. An accounting student was handling their accounts using spreadsheets, but the records were not consistent, accurate, as well as complete. To address these challenges, Vertix Auditing was appointed to handle the backlog bookkeeping and provide ongoing accounting services.  

Key challenges included:

• No structured accounting software was ever implemented.
• Invoices, receipts, and payment records were scattered across email, WhatsApp, and physical files.
• The management needed clear reports that show how much profit each vehicle and each branch was making, so they could plan their operations better.
• The client required not only the historic backlog to be completed urgently but also the immediate implementation of proper ongoing bookkeeping.

Our Solution to Backlog Accounting Issues

Understanding the urgency and complexity, we took a multi-pronged approach to resolve the backlog and bring structure to their accounting function.

1. Software Implementation:
   We deployed QuickBooks as their central accounting software due to its multi-branch capability, easy integration with Excel, and cloud-based access. For fleet-specific data, we used the built-in feature of classes to enable tagging of expenses and revenue per vehicle.
2. Data Collection & Mass Upload:
   Our team coordinated with the accountant to gather all historic information. We used Excel import templates and third-party tools like SaasAnt Transactions to upload a massive number of transactions, including invoices, expenses, and receipts, into QuickBooks.
3. Custom Data Mapping:
   We set up special fields in QuickBooks to mark each transaction by branch and vehicle. This allowed us to identify almost all the key information, like fuel expenses and customer invoices, so we could clearly see how much profit each vehicle and branch was making.
4. Reconciliation & Adjustments:
   Using the third-party source documents, such as bank statements, we reconciled all payments, identified missing transactions, and made necessary accrual entries. For vehicle depreciation, we implemented a fixed asset register with automated monthly depreciation postings.
5. Reporting Setup:
   Once the old data was organized, we built proper reports. These included profit reports for each vehicle, income statements for every branch, and other useful reports for inventory, accounts receivable, and accounts payable.

Results and Client Feedback

Even with a tight deadline, we managed to finish the full backlog of almost two years of financial records in just five weeks. Our clear and organized process made it possible to handle this extensive task efficiently.

The management of client expressed strong appreciation for our work. They appreciated how we made an extremely cluttered task manageable and gave them clarity on their financial position, down to each branch and vehicle. They are now continuing with us on a retainer basis for ongoing bookkeeping, and we are assisting them in preparing their monthly management reports.