Professional Documents
Culture Documents
After data gathering, the consulting engagement ascertained that URConcept Store
by MgBabe lacks of appropriate manual system in managing their transactions that gives them
problem in monitoring their cash, sales, expenses, and especially their inventory. To solve this
engagement, the consulting team proposed to provide a more appropriate and better manual
accounting system for them to use it in running their business clearer.
Overall, it seems like the root cause of the company’s problem is the manual
recording of transactions which will lead them to an inaccurate records. And also manual
recording takes a lot of time and effort just to finish a specific task. With that, the consulting
team recommended simple accounting systems to be used by the business for them to have
smooth and convenient process in recording the daily operations of the business.
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I. COMPANY BACKGROUND
1. Company Overview
UR Concept Store by MgBabe, a convenience store and also serves as sub-distributor of URC,
offers the country's leading Jack n' Jill snack foods and beverages that bring delight and make
life a lot more fun!
2. Company History
Enrico Ona is currently working at Universal Robina Corporation (URC), main producer.
URC had a project that needed to lessen its cost in delivering orders each of its customers so
URC planned to make a sub-distributors to be supported by its employees thus URConcept Store
was established. His wife, Maricel Ona is the owner and also manages the operational while
Enrico Ona is in charge with sales of URConcept Store by MgBabe General Merchandise. The
store offered a wide array of goods, leading snack foods and beverage at very affordable prices.
URConcept Store is a type of general merchandise retailing and at the same time wholesaling.
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Since it is independent physical store, it has a walk in customers, mostly students because of its
location, and also has customers that have bulk orders that need to be delivered.
3. Management Team
The business is being managed by, Maricel Ona who is in charge in operational to assess
how its daily operations while Enrico Ona is in charge with sales to assure that there is enough
stocks in their physical store and to satisfy their customers with their service performance of
URConcept Store by MgBabe General Merchandise. Marnelli Ramos, sister of Maricel, is their
clerk, her job is to assist customers, make sure that payment of amount of cash is correct and
sufficient.
5. Organizational Chart
1
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Figure 2: Organizational Chart of URConcept Store by MgBabe
URConcept Store by MgBabe has two owners, namely Mrs, Maricel Ona and his
husband, Mr. Enrico Ona. They have three employees: Marnelli Ramos, their cashier and sister
of Maricel Ona; Jay Manalastas, their sales clerk/ store employee and their delivery employee.
Universal Robina Corporation (URC) is one of the largest branded food product
companies in the Philippines and has a growing presence in other ASEAN markets.
8. Vision
URC's vision is to be the best Philippine food and beverage company, with a powerful
presence throughout the ASEAN region, carrying a wide portfolio of delightful brands of
exceptional quality and value, equipped with efficient systems and motivated people. We are
committed in making lives a truly fun experience.
9. Core Values
Integrity: We are guided by transparency, ethics, and fairness. We build the business with
honor and are committed to good governance. Our processes and products meet the highest
standards. We are credible in our dealings with both internal and external stakeholders.
The main focus in this company is their working capital management. The goal of
working capital management is to ensure that a company is able to continue its operations and
that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational
expenses. The management of working capital involves managing inventories, accounts
receivable and payable, and cash.
Goals
Monthly sales not less than of P1,000,000 is their short term business, they can
achieve this by performing weel in their tasks and promoting the business
in public.
Root Problem
A manual system requires employees and managers to write down each time an
item is removed or sold from the store. Also, manual system does not provide any
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number, as all numbers from the store are gained through physical counts. One of the
difficulties of running a manual system is that physical counts must be performed
frequently to control the items in the store. This is time consuming and prone to error.
Objective
The project is initiated due to conflict in working capital management where inventory
management, accounts receivable and payable, and cash are affected. Proper management of
working capital will result in successful operation and healthy financials. It maintains a solid
balance between growth, profitability and liquidity.
● To help in maximizing return on current asset investment and minimizing the cost
of capital spent on working capital.
The scope will be based upon the identified problem within the company where in in this
case, up to the extent of the company’s working capital management and the accounting system
being used. Management of the inventories, accounts receivable, accounts payable, and cash
sums up the Working Capital Management Process. The scope of the study is limited to this
because of the existing problem the consultants need to make sure that the company is able to
operate continuously while taking in consideration managing long-term and short-term debts
including operational expenses.
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Another part of the scope of this study is the accounting process or system that they use.
In this case, the company still uses the manual method of accounting which makes it a bit
bothersome to the whole company. The consultants may provide advice on how to improve their
accounting system or at some point, the consultants may even provide an accounting system
which is appropriate for the company’s operation. Accounting systems are used for better and
faster processing and recording of data within the company. It can help provide information
about the operating performance of the company in the previous years and may even help in
forecasting the ability of the company to continue its operations and planning a strategy as such.
Also, limited time only was given to 3MEA to conduct this study.
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For the purpose of the engagement, a five-phase process was and will be conducted by the
researchers to meet the objectives of the improvement of the working capital management of the
company. The following phases are the:
A series of interview were conducted by the researchers with URConcept Store by MgBabe’s
owner/manager. The purpose of the initial interview was to know the basic information of the
company and what kind of problem they are dealing to in their company. The researchers
prepared a list of questions before the actual interview and were sent by the consulting team
through e-mail in order to allow the interviewee to prepare and review some of the data required
to efficiently conduct the interview and to fully answer the questions. During the actual interview
there were additional questions asked by the interviewer that were not listed in the questionnaire.
Days after the initial interview, the consulting team conducted a follow up interview and the
purpose of the interview is to gather the information needed by the researchers to start the
engagement paper.
Phase 2: Observation of the company’s facility as well as the selling and recording
process and determination of the problems and symptoms and finding the root cause.
A small tour was also conducted by the researchers on the facilities of URconcept store
and the daily process of its business in order to attain a thorough observation to the overall
operations of URConcept Store and to obtain data that are needed to perform data analysis. Also
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in this phase, after the observation was conducted, the researchers were able to define and
measured the problem--- which is the need in the improvement of the working capital
management of URConcept Store by MgBabe. Afterwards, the researchers performed an
analysis of the defined problem and then sought client’s feedback about the proposed action
made by consulting team.
After seeking and gathering information and after determining the problem and
symptoms of the company, in this phase, the researchers started formulating solutions regarding
the improvement of the working capital management of URConcept Store by MgBabe. The
following are the solutions and alternatives decided by consulting team:
3.3.2 Making a simple formula system using Microsoft Excel in order to easily compute
the cash flow, receivables, and inventories.
The researchers opt to use the second solution. The Excel based system template was
downloaded from the web and it was modified by the consulting team to match the need and
accounts of the URConcept-Store-by-MgBabe. Then, it was presented to the client.
After being presented to the client, the researchers planned to implement the said Excel based
systems after being modified and being polished. The researchers also planned to train the client
and client’s employees how to use the new excel based system and show how the systems work
and explain how this systems will help in improving the client’s working capital management.
1. Value Propositions
2. Customer Segments
Customer segments are the community of customers or businesses that you are aiming to
sell your product or services to. One of the major client of the business is the Lubao
Supermarket, Pandacaqui Supermarket, DHVSU students and the nearby commercial lots and
residential lots that are located in Bacolor, Pampanga. Also, some walk-in and regular customers
in that area.
3. Customer Relationship
Customer relationships describe the type of relationship a company establishes with its
specific customer segments. Customer relationships are driven by customer acquisition, customer
retention, and boosting sales – in other words you need to get, keep, and grow your customer
relationships. URConcept Store by MgBabe maintains good customer relationship by giving
discounts and some additional value products to its regular clients that always buy bulk orders.
The business is also ask for customers' opinions about their goods and services to be considered
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in improving customers’ satisfaction, leading to repeat purchase behaviour and an increase in
sales.
4. Revenue Streams
Revenue is the lifeblood of a company. Most of the company’s sales is from its
wholesaling clients. Most of its wholesaling customers are paying through cash on delivery
which means payment in which ordered goods are carried to the buyer's place but are handed
over only upon full payment, but there are clients that pay through cheques because it is safer
than cash. For its walk-in and regular customers, cash is obtained from sales.
5. Channels
Channels are a critical element of the business model. They are how a company
communicates with and reaches its customer segments. The URConcept Store by MgBabe has its
L300 FB vehicle that is use when delivering bulk orders. Also, a physical store to its
neighborhood regular customers and for walk-in customers for hassle-free and more convenience
buying of goods.
6. Cost Structure
7. Key Activities
These are the daily activities of a company involved in selling its product, generating
revenues, as well as general administrative and maintenance activities. Key activities for a
company include manufacturing, sales, advertising and marketing activities. URConcept Store
by MgBabe opens by 7:30 in the morning until 5:30 in the afternoon to generate its sales, they
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regularly operates for 10 hours per day. It has one cashier and one sales clerk in managing its
daily transactions.
When it comes in marketing and advertising, the business has some signages that is
posted in public places to be advertised.
8. Key Partners
9. Key Resources
URConcept Store by MgBabe started with an initial capital of P300,000 and a year after,
the business already produced L300 FB vehicle to be used in delivering goods.
URConcept Store by MgBabe has three employees, 1 cashier, 1 sales clerk, and 1
delivery employee. Since it is somehow family business like, the available family members in
the area help in the convenience store business every now and then. Also, the owner/managing
partners are actively engaged in the daily operations.
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Table 1: Business Model Canvas
Cash on
Quality goods and L300 delivery on its
services FB cab clients
Discounts on bulk Physic
orders Cheques
al store
Feedbacks are from its clients
considered
Low-priced products
After the interview, observation, and inspection of the related documents conducted by the
researchers, the following information were gathered in order to create and implement new
regimes and protocols deemed to be supportive to enhanced the business processes.
1. Cash Management
Based on the inquiry conducted by the researcher regarding cash management are:
they are having a hard time in maximazing their cash on hand for ordering of supplies
because they do cash basis whenever they order in URC. But the things is their customers
are paying through credit.
when they order, they only have limited amount of money on hand to pay the supplies
being ordered.
They are not able to determine wether they are gaining profit or not monthly. And when
they computed recently they discovered that insted of having profit, they gain loss. If only
they knew it they could have lesses their expenses.
2. Accounts Receivable
For the accounts receivable, URC by MgBabe delivers the inventories to their customers and
gives a 15 days allowance for their debtors to pay the orders they had. But there are customers
who doesn’t pay on time. Even if the customer’s payable is already due, some are still not
paying. They thought that they are gaining profit already, but the truth is they are already having
loss. And that is due to lack of analysis and proper monitoring.
3. Inventory
Inventory management is one of the issues addressed by URC by MgBabe’s owner. The
following are the problems the management wants to improve:
With all these issues mentioned above it only shows that URC by MgBabe are having a problem
in their Working Capital Management. They need to know more about better cash management,
account receivable management, inventory management, and even in the payables management.
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VII. SYNTHESIS AND CONCLUSION
The entity’s stated common problem based on the interview made is the lack of
accounting system. The entity still uses the manual method. From recording transactions
including purchases, sales and the like up to computing for the net income and monitoring
inventory count. In effect of the lack of accounting system, the entity’s records have
discrepancies. During the first year of the entity, all they know is that their business is gaining,
but when they computed all the recorded transactions, they found out that there is a huge
inconsistency especially on their inventory record therefore making the entity prone to
significant risks.
Based on the findings, the consultants conclude that accounting system is one of the most
vital need of the entity. It is a widely range issue as it affects the inventory which is the focal
point of the entity’s line of business. Based on the interview made, there are some discrepancies
in the entity’s financial records especially inventories and net income. It is therefore concluded
that a proper accounting system is one of the possible solution for the efficiency and accuracy of
records. An appropriate template for recording inventories is also one conclusion drawn by the
consultants. Using proper accounting system and an appropriate template in recording will help
the entity to operate properly and records can easily be inputted, computed and even monitored.
As for the working capital management of the entity as a whole, the consultants
concluded that assigning a staff who has the knowledge, skill and expertise in the field is also
considered in order to be able to monitor the working capital regularly which includes the
accounts receivable, cash and inventories. Monitoring cash in-flows and out-flows will help
determine whether the entity is having an income or a loss.
With regards to the cash in-flows and out-flows of the entity, the consultants suggests to
cut expenses as much as they can to maximize the entity’s profitability and encourage faster
collection of payments to maximize the cash needed for the company to operate. Also,
considering that the entity’s line of business includes generally of perishable goods, it is a must
that they follow the FIFO Method or the First In First Out method of accounting inventories in
order to avoid any conflict especially to the customers.
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Another thing to consider, is to build a strong customer and employee relationship. These
are the core value which plays a huge role in the entity. Building strong employee relationship
will help them to become more productive and more effective to their work. Also, relationship
with customers is also part of the consultant’s conclusion. Considering the entity is just a small
entity and the industry where the entity is under has lots of competitors, building customer
relationships will also be a helping hand for the growth of the business. This is because
consultants see that customers are the key people which determines the success of the entity, to
be able to continuously operate and they also serve as the best way to advertise the company
better than other competitors.
Overall, the main focus of the consultants based on the call of the entity’s owner is the
working capital management especially inventories which directly affects the whole operating
process of the entity. Providing or establishing an accounting system and a proper template with
regards to the problem identified is necessary.
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VIII. RECOMMENDATION WITH EXPECTED BENEFITS
Based on assessment of the data and conclusion, the consultant decided that the best
solution for the company is to adopt the template for accounting system provided by the
consultant in Appendix D.
Expected Benefits
In accordance with the recommendation stated above, it is expected that the entity will
able to minimize the conflicts with the working capital management. The entity will able to
control and manage its inventory. It expected to have efficient cash management system.
In addition, it will be less hassle for the entity to prepare monthly report. At the same
time, they will have accurate and in time reports. The entity is also expected to have consistency
and clarity in their report especially when they are needed. In addition, they will have less time
on preparing the papers needed and can focus on the operation of the business.
Newly proposed accounting system that focuses on “cash” and “receivable” will likely be
used every weekeneds to summarize the daily transactions. While the proposed system that
focuses on inventory management, it will be updated every time there is change in inventory.
URConcept Store by MgBabe is good in terms their payable. Finally then, the monthly
accounting system will likely be accomplished whenever a complete set of a weekly accounting
format is completely filled up
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X. APPENDICES
APPENDIX A
Engagement Letter
URConcept Store by MgBabe
Bacolor, Pampanga
Dear URConcept Store by MgBabe,
We are pleased to have the opportunity to provide consulting services to your company.
This letter is intended to confirm the terms of our representation of services to you. This
document covers matters that establish our working relationship, so please read it carefully.
Specifically, this Engagement Letter describes the Terms upon which System Concepts, Inc. will
provide professional services to your organization. At your direction, we will undertake to
provide appropriate consulting services in order to advance your interests with respect to such
matters as you may assign to us and we may accept on a periodic and/or ad-hoc basis.
3. Confidentiality: We treat all aspects of our client relationships as confidential, and will
gladly provide or sign appropriate non-disclosure agreements if desired.
4. Other Matters: Unless we otherwise agree, the terms and conditions of this letter will
apply to all matters for which you engage us. If you have any questions or concerns about
the terms of this Standard Engagement Letter, please contact us immediately.
Please acknowledge your receipt of this Letter, and your agreement with the terms and
conditions set forth by signing below. Note that this Letter does not obligate you in any way to
contract with us for services, instead it simply defines the terms and conditions in the event you
chose to engage us at some point in time.
Very truly yours,
3MEA Inc.
___________________________________________________________
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By (Printed Name) : __________________________________________
Signature: __________________________________________________
APPENDIX B
Project Goal Statement: To improve the Working Capital Management of URC by MgBabe
OUTCOME #1 – Workplan
OUTCOME #2 – Workplan
Resources:
Laptop and
Template form
internet
OUTCOME #3 – Workplan
Resources:
Laptop and
Template form
internet
Outcome #3
Obtain information regards to the enitity’s Visit directly the company for
Inventory management and control interview with the owner.
Obtain a recent copy of monthly inventory Ask for soft copy through
report for three consecutive months gmail account
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INTERVIEW TRANSCRIPT
Interview Transcript
A: We are having trouble in reaching our sales target every month because our main target
market were students, as you can see, our location is near to a school, so when there were no
classes or when it is vacation, we barely reach our quota. We are also in need of a system
because as of now, all the business transactions that we have, we do them manually.
A: First, we are having trouble on our cash availability because when we order supplies in the
URC, we pay through cash basis but our customers pay on credit basis, so when we order we
only use the cash that we have on hand. Second, is the inventory management, because we have
bad orders, but they were not included in our inventories, they should be accounted for us to
have an accurate record of the inventories. Also, because it is manually recorded and counted, we
do not have a track how many inventories do we have, if you are going to ask me how much
stocks that we have, I will not know the answer. I think, the solution is a system, but we do not
have budget for that because we are only a small business yet.
A: Inventories are being delivered every two days, and sold everyday. Before we managed to
make the inventory report monthly but now we only do it on a quarterly basis. It should be on a
monthly basis because we need to know our ending inventory every month to know if we are
having profit. Now, because we switched from monthly basis to quarterly basis, only after four
months we able to know if we are earning or not and recently we computed and we discovered
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that we have losses instead of profit. If we had known it sooner, we could have limit our
expenses. We also lack on analysis.
A: I somehow doubt the inventory report that my brother-in-law gives me, because we track and
record our inventory manually, I think we are prone to mistakes. But because I am used to this
kind of process, by having an ocular observation I will know the estimated value of our
inventories but of course there will still inaccuracy that will happen because again we do them
manually. Sometimes I will check the item’s price randomly and I will discover that the price
attached is wrong
A: We record our all transactions manually we don’t have any system or software.
A: Manually recording transactions is a very risky and needs a lot of work, and for me when you
are using manual process you are prone to mistakes and inaccuracies.
A: We are encountering a lot of troubles, first is operation, also customer complaints, we can not
perfect that. Some customers says there is problem in the quality, they say that sometimes the
items that were sold to them is near the expiry date. Reason is that, from the supplier even if the
supplies are going to expire one month after, we still accept them because we need stocks. There
are also difficult customers where in, you allowed them to pay within 15 days, and you delivered
the inventories and still when the credit mature they are not paying a single cent, but credit is
part of the business we cannot remove giving credits to customers because we will not survive
either. We are also in need of new customers, because our customers will come and go. We are
also having trouble on reaching our target sales, we only reach our quota when it is peak season.
There were also competition involves, and our only edge on our competitors is our delivery
service, some of our competitors offers term discounts so our customers are going to them.
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Operation wise, we are having trouble on use of manual processing. We are also experiencing
trouble on stock availability. We do not also do payroll, we cannot monitor the performance of
our employees.
A: For me, the most difficult way in managing the business is attracting new customers and
maintaining the stock availability. It is not that easy to attract new customers because we have a
lot of competitors and they are way bigger than my business they are sub-distributors.
DOCUMENTATION
APPENDIX C
Presented in this section is the excel templates manual that sets general guidelines to be
followed out by the user of the excel templates for its successful implementation. The excel
templates manual presented in this report is still subject for approval of the owner and can be
changed and updated to demands of the owner of the company.
I. GENERAL GUIDELINES
1. The owner can update and revise this excel templates manual whenever and
whatever circumstances that are significant in nature affecting both the operation
and usage of the excel templates manual.
2. The owner has the sole responsibility of to whom he will assign the use of the new
excel templates.
3. Responsibilities inherent in the new excels templates must be defined and explained
by the owner to the new employees or to the employee to whom the use of the
templates were assigned to established the obligations and limitation of these
employees on their assigned tasks especially those related to the usage of the
templates.
4. In cases of security issues, the owner may include additional security by making a
passcode to the excel templates.
APPENDIX D