Soriano Eco Fiber

Requirements created for financial sustainability 

About Soriano Eco Fiber

Soriano Eco Fiber is a fully owned subsidiary of the Foundation for a Sustainable Society Inc. (FSSI) Their core business is processing fibre from coconut husks, which are normally considered agricultural waste. Soriano produces , coco peat and hand-woven coco coir nets. Stitched coco coir is sold to local bed manufacturers and exported as garden material and irrigation filter to the US and Asia-Pacific. Coco peat is sold locally and exported abroad as a growing medium for horticulture. The hand-woven coco coir nets are sold locally and abroad primarily for erosion control. Soriano has 23 regular workers and 13 contract workers. Most of the workers are from families who are displaced from coastal areas due to typhoons and unemployment in agricultural industry. General goals for 2008 are to generate positive cash flows, to establish a more efficient financial and accounting system and to improve the teamwork. The social impact of Soriano is:

• local employment and/or income generation
• improving quality of life
• transfer of knowledge and skills

Business case

Soriano didn't have a genuine, workable financial accounting system is available, nor implemented.

Therefore, the financial system within Soriano had to be improved. With three different production sites, financial monitoring has to be in place. Auditing is preferably part of this system as well. For the development of this financial accounting system the CEO of Soriano, Mrs. Maitet Pascual-Diokno, asked SharePeople for the assistance of a financial expert. With the help of SharePeople, Soriano found a partner in Mr. Frank Koster, Head of Risk Management at Credit Agricole Deveurope.

Results

Analysis

Frank Koster made a profound analysis of the current situation at Soriano Eco Fiber. Talking to different stakeholders, FSSI and employees of the organisation, he made quite an analysis. It turned out that particularly finance and HR were having difficulties:

• Accurate cost calculation was difficult, resulting in unexpected liquidity problems. Annual accounts were not yet ready, so a clear picture on the financial position of the company was difficult to get.
• Some events lead to confusion within HR. There are a lot of new workers who needed to adapt and gain more experience.
• Sales was still hard, because of the global financial crisis.

Advice

Frank and Maitet knew that a completely new accounting system was hard to create, as other issues were at hand and needed consultation first. Therefore, the focus was transferred to giving advice on solving these issues first.

• Arrange extra funds, to avoid liquidity problems
• Create a structured action plan to overcome difficulties and monitor closely
• Strengthen management, find temporary replacements to overcome gaps
• Create a sales force, to boost sales
• Put control and procedures into place, in finance, production and inventory, to overcome fraud and provide clarity and structure
• Some advice on minor adaptations in the production at the Bicol and Sariaya plant was given as well

Impact on the partners

Maitet took the advices to heart and is currently working on an improved business plan for the company. This is to act upon the issues at hand and arranging for new financing of working capital by FSSI. Interviews with sales managers are in process, and the new finance manager is on board for a few months already.

Follow up

Maitet stays in close contact with SharePeople to communicate on the last actions done and state of business. In September 2009 Taco Hoekstra, Programme Manager at SharePeople, will go to the Philippines. During his trip a meeting with Maitet will surely take place. The monitoring and evaluation process continues as well. An official moment of monitoring takes place every 6 months for the next two years.