There are several benefits for the EIS, or Enterprise Investment Scheme, to make this an interesting...
This is one of a series of accounting case studies where we discuss how we've helped a business.
Today we're going to talk aout M2M. We responded to a request for a management accountant for this medium sized company to produce management accounts and overall financial support for a company without a senior level financial manager.
M2m is an international computer chips importer and retailer who is very important in the supply chain from the international computer chip manufacturers like Samsung etc..
The migration from an old bookkeeping system had not gone well and required several months of unpicking transactions which had been posted while the system was not set up correctly in Sage200.
Fortunately we had experience in this system and we were able to reconcile the trial balance and set up procedure manuals for their teams to enter data into the respective modules in a way which meant that the accounting reports were becoming consistent and producing the required management data.
As the data became cleaner we helped to identify the roles required to manage the stock effectively which, in turn, meant better stock reports and less errors with the warehouse.
This client was an interesting case study as we had to give advisory support to the director on his operating decisions when picking which new technology stock lines he was investing in to sell into the UK and Europe whilst we did not know explicitly the market needs but we could advise on risk and stock management issues which would feed back into the financial health of the company.
Who are they and what do they do (and how do you help them)?
M2M Ltd, www.m2m-direct.co.uk/, was founded in 1998. The principal activity of the company is that of a distributor of computer and information technology (IT) related components, solutions and software into the computer manufacturing and IT channel to resellers, e-tail and retail outlets for both specialist and standard memory as well as storage server and server products.
M2M, sell a range of Dram memory and SSD components for PC’s, Notebooks, Servers, and Mobile devices. They represent Samsung Semiconductor, Samsung Electronics, Micron Semiconductor who own the Crucial and Lexar brand. M2M Also represent, SK Hynix, G-Skills. Seagate and Verbatim.
Budgeting is a major part of this type of business and Key Business Consultants are here to aid them. Via our tailored management accounting services, we help them review their credit control, stock control, budgeting and financial reporting systems which will allow them to make better business decisions based on the qualitative analysis. You can read more accounting case studies here.
This analysis helps for internal board control of the company and also to provide timely financial records to key stakeholders. More information can be found here.
What are the key challenges in their market?
The unprecedented challenges facing M2M is being opportunistic. The component business is traditionally a high volume low margin commodity business for M2M and is subject to both pricing, supply and demand fluctuations.
For example, we saw on both Dram Memory and SSD’s large price erosion up until September 2016 then prices increased with increased demand for the final months due to a switch in demand for Flash Nand based products.
The business is in line with competitive pressures from the growing world of technology and from its competitors. Satisfying diverse customers with different needs can become a big challenge, as this would mean adding complexity and cost to the inventory management, as well as the demand for faster service, lower prices and compliances become difficult.
What are they getting right?
Technology is the fastest growing industry in the world, with new inventions of compact storage devices, peripherals, and innovative flash memory drive, M2M provides them all. Operating since 1997, M2M has seen the change in the IT industry, from 2MB of floppy disks to 1TB of storage drives.
One thing that is constant is fulfilling its customers and their demands at an affordable price, offering them unique products. These products are shipped to countries like Europe, USA and the far east.
What makes them different?
Their experienced marketing team has in-depth knowledge of their products and an understanding of supply chain management. M2M provides a real one-to-one service which sets M2M different from the rest of its competitors. The route to the market is highlighted by their dedication in visiting their clients and customers in conjunction with their manufacturer partners and sample any products required.
They offer a team to meet the demands of the evolving and technology of virtualisation storage data center management as technology moves towards cloud computing and various components.
During 2016 M2M moved into the enterprise Storage business offering a range of storage solutions and software. The design in the cycle of some of these opportunities is somewhat longer than the components business; which required the investment into more technical sales support and marketing. M2M saw their first significant revenue and enhanced margin in 2016 in Datacentres and Cloud-based applications.
This strategy is a key investment for enhancing the profitability of the company in the future. Furthermore, in this period M2M started to work with the Dell-EMC Corporation on a OEM Distribution agreement. Also they worked with INFINIDAT one of the emerging suppliers for complete storage solutions into the Datacentre environment.
If these accounting case studies has made you eager to find out more, please get in touch.