We asked Electract’s Finance Director Richard Malpas about his experience of using RedSky’s Summit accounting system.
Established in 1950, Electract Limited is an electrical engineering expert for all types of electrical building services. The company has a turnover of around £16 million and employs 120 fully trained electrical engineers, plus office engineering and administrative staff.
Why did you decide to switch to a new system?
We were using a generic accounting system, rather than a construction-specific one, and were finding lots of ‘holes’ in it from a construction industry viewpoint.
For example, it wasn’t designed to deal with concepts like retentions or applications, so every time we tried to look at a job, we had to rely on a myriad of spreadsheets to fill in the missing information and try to control things.
The package only had the core accounts. It wasn’t giving us the complete picture and we were always running a couple of months behind.
What made you choose RedSky IT?
We looked at a lot of systems before selecting RedSky in 2011. I think it was the comprehensive nature of the Summit package that impressed us the most – it was one of the most complete systems we could find. And the fact that it was designed specifically for the construction industry, of course.
Overall, what are your thoughts on Summit?
I am really impressed with Summit; it’s an incredibly comprehensive system. It has the flexibility to pull out data in any format you want, so you can adapt it to the way you want to work. Going with RedSky was an excellent decision. It has fundamentally changed a lot of the ways we work for the better.
Let’s start with the Purchase Ledger – how has Summit improved things?
It’s made a massive difference. We’ve gone from a situation where invoices weren’t going on the system until after they’d been approved to one where invoices are going on the system straight away and then awaiting approval. That has given us immediate visibility of all the invoices that are out there. That’s something we didn’t have before.
Cost-wise, we can instantly see the status of jobs, which is a big advantage. Under the previous system, we were fighting a losing battle because there were usually two months of invoices that weren’t even on the system at that point.
Has Summit made it easier for you to get the tax treatment right for subcontractors?
Yes. The old system didn’t ‘understand’ the concept of a subcontractor, whereas Summit has a separate ledger, which means we can run all the Construction Industry Scheme (CIS) details within the system.
All the tax information is loaded onto the system on day one when we set up a new subcontractor, so from that point onwards, the tax treatment is dealt with automatically each time. We were doing it all manually before, so it’s been a big time-saver. It has also proved very useful from a reporting point of view.
Are retentions now under control?
Yes. Unlike our previous system, Summit understands what retentions are and gives us a way of controlling them. There’s no time wasted in keying all the details onto spreadsheets. With Summit, the retentions information is instantly visible by job and by customer. We now use the system’s document management system (DMS) to flag up the dates when we need to start chasing.
What about Purchase Orders?
Before switching to Summit we were still raising manual purchase orders and using spreadsheets to work out how much was committed to each job. Someone had to enter every single order onto a spreadsheet, which was very time-consuming. The potential for human error was obviously pretty large, and with two sites it was easy to miss that there was an order out there.
Things are very different now. Every order raised is now on the system, so we have full visibility on the costs for each job. We also had a bit of bespoke work done, to change the front screen of contract enquiries so that we can see instantly what the total ordered value on the job is. Although that detail is not so important for the large industrial jobs because they run on for a long period of time, it’s been really useful on smaller jobs, because it instantly gives our engineers a target figure to aim for as a sales value, without having to drill down any further into the system.
Does Summit make it easier for you to analyse jobs?
Yes, it allows us to analyse them in far greater detail than before. For example, on the housing side of the business, every single plot on a housing contract is now a separate job on the system. And then within each plot, we break it down even further: to first, second and third fix.
So if we want to look at a housing contract that’s not performing as well as expected, we can drill down to look at it by plot level, and then examine if the problem’s to do with the first, second or third fix. Drilling down means we can work out the root cause of the problem far more quickly than we could ever have done before – that’s because everything’s broken down into manageable chunks and we have sight of all of them.
And you’re now emailing payslips…?
Within the last few months, we’ve started using Summit to email payslips and P60s, rather than posting them out.
The emails are fully encrypted and everyone has their own password to access their payslip. We raise the payroll on a Tuesday and the money gets paid into people’s accounts on Thursday. Whereas previously the guys wouldn’t get their payslips until Thursday, they can now see them straight away on Tuesday, which they appreciate.
Emailing payslips is a big bonus for Electract: we don’t waste time printing out the payslip and the label, stuffing and sealing the envelope and then posting it; and there are no stationery or postage costs. Obviously, we’ve had to purchase the module from RedSky, but we’ve worked out that it’ll have paid for itself within the first year. We’re now emailing out P60s too.
What difference has Summit made to your contract ledger activities?
One of the things I like about the RedSky system is its flexibility. The ability to add in new fields gives you a way of adapting Summit to suit how you want to work.
We’ve used that feature a lot on the contract ledger. For example, we’ve added in around a dozen analysis tags – things like whether a job is a new-build or a refurbishment, which sector the job is in, whether it’s a negotiated job or not, and the month when it started and ended. We’re able to put the tags in ourselves, it’s all very straightforward.
By combining the analysis tags and Summit’s DMS I can access some incredibly valuable management information. Are new-builds more profitable than refurbishments? Are secondary schools better for the business than primary schools? How are we doing in the hospital sector? I can just filter the data to find out whatever I want to know. It’s all very, very easy and really useful.
Summit’s flexibility and the better visibility it provides have also brought a radical improvement in how we analyse individual jobs. We now have access to real-time information, so we can see what stage a job is at and whether it’s going to plan. If there are any problems, we can identify them at an early stage and nip them in the bud rather than finding out after the event, which is what used to happen.
Does that flexibility make life easier in terms of the general ledger too?
Yes, it’s easier to get information out of Summit in a format that you can manipulate. That goes for the system as a whole really.
I’m thinking in particular here of Excel. With my quarterly financial accounts, I’ve now got an Excel spreadsheet that delves into the RedSky system and produces the figures for me. So I just go to the spreadsheet, change the period I want to report on and it automatically produces a set of accounts.
Under the old system, I’d be printing off reports and typing in all the figures. Most of the time it would be correct, but sometimes you enter the wrong figure and then waste time looking for the error.
On average, I’d say it saves me around one and a half hours’ work each time… as well as a lot of frustration.
Electract has its own stock – does Summit make that easier to control?
We have a housing division so we hold a lot of stock here for all the housing plots. In fact, in terms of transactions, I’d say it’s probably our biggest area.
The RedSky stock module is certainly as strong as what we had before, but what we find really useful about Summit is that it gives us the ability to import transactions from spreadsheets – again, it’s a generic thing with the system.
We prepare a lot of housing kits, for the first, second and third fixes. Each kit has up to 50 items in it. Rather than keying each item in as a stock issue, we have it all set up as a spreadsheet that we import as a transaction, which saves a lot of time.
Which aspect of Summit do you plan to develop next?
Something we’re looking to implement more fully is the DMS, which is incredibly comprehensive and well developed. We’re now starting to add in all our training records and we intend to transfer all our core data (things like job-related files and emails that are usually just stored on file servers) into the DMS.
The main reason for doing that is that the DMS offers a far, far quicker search facility than anything available within a normal server. What’s more, it searches within the actual documents themselves, not just on the filenames. So even if you just have a name to go on, the system will help you to find the information you’re looking for, no matter how deeply it’s buried. It’s a very powerful piece of kit that we’re keen to start developing and using more.
My estimators were looking at investing in an internet-based drawing package, to make site drawings available to some of our subcontractors for revisions, and to make sure everyone’s always looking at the latest version. But I’ve told them to hold fire because I think the DMS will do everything they need. And from a costings point of view, with the DMS we’ll be able to look back at how things stood three months ago and work out what has changed between then and now.
What approach would you recommend to a new Summit user?
You can’t roll out the whole thing in one go, so we started by implementing the modules that gave us the biggest gain. We then rolled out other modules, as and when we were ready, like emailing payslips. We have also purchased other modules that we haven’t yet rolled out, like estimating.
Why would you recommend RedSky IT?
The great thing about RedSky is the way they develop and adapt the system. Summit is very comprehensive and it can be as flexible as you need it to be. It really adds value and definitely pays for itself, many times over. It’s made a very big impact on our overall performance.