Building Success on a Foundation of Finance

Accounting 101

by Jason Leber | Nov 30, 2018 | Accounting 101

Building Success on a Foundation of Finance

By Paul Johnson
CPA, CGMA, MBA

What is the secret of successful businesses? The answer is elusive, but you could argue that it’s a strong financial foundation. No business is immune to disruption or perfect at predicting what comes next. But as long as they have their finances in order they can survive the unexpected and keep growth trending upward.

The next question to answer is how do you build a financial foundation? It looks different at every company, but it should include these essential qualities and capabilities:

Fast and Efficient Financial Workflows

The amount of time it takes to close the books or produce reports has a huge impact on performance. When finance is slow and inefficient it forces decision makers to wait to act or to move forward without a clear financial perspective. When finance is fast, the situation is exactly opposite. These companies spend far less resources on the nuts and bolts of accounting. Instead, they work on utilizing accounting to drive revenue, cut costs, or sustain growth.

Rigorous and Transparent Internal Controls

Finance is both complicated and consequential. When companies lack internal controls to monitor and govern their financial processes, those processes inevitably produce issues. Internal controls let companies manage everything from data access to transaction approvals. Essentially, they give companies a way to standardize finance from the top down, ensuring it operates as effectively as possible.

Alert and Available Financial Staff

Modern accountants still spend huge amounts of time manually entering data and cross-checking figures. It’s a dull process that is prone to error. Worse, it wastes the time and talent of financial professionals who could be extremely valuable working on other projects. A strong financial foundation automates and innovates the heavy-lifting of accounting so that financial staff can focus on more productive things.

Intuitive and Integrated Accounting Software

Older accounting software offers limited capabilities and outdated interfaces. What little value it still has declines further every year. Modern accounting software, by contrast, makes it easy to organize and analyze data to produce in-depth financial insights. It’s also a lot easier to use thanks to the cloud, automation, and a series of user-friendly menus and tools. Technology and finance are now inextricably linked, and best-in-class accounting software is basically a prerequisite for a stable financial foundation.

Once these four pieces are in place finance is positioned to fire on all cylinders. At that point accounting is an asset and not just an administrative obligation.

Sage Intacct is a next-generation financial management solution that transforms accounting departments top to bottom. If you’re ready to upgrade and enhance finance for years to come, contact Altasphere Consulting for a consultation.

Is Quickbooks Draining the Life Out of Your Growth?

Accounting 101

by Jason Leber | Aug 7, 2018 | Accounting 101

Is Quickbooks Draining the Life Out of Your Growth?

By Paul Johnson
CPA, CGMA, MBA

With company growth, sometimes the change in your financial processes is subtle, making it difficult to know whether you need a stronger financial management solution to handle your company’s increasing complexities.

Your teams see it in the number of modifications they make to their monthly processes to pick up the slack where Quickbooks leaves off. However, inconveniencing your teams isn’t the only way Quickbooks affects your business. Let’s take a look:

quickbooks app on phone in pocket

Too Many Spreadsheets

Spreadsheets are helpful to a point, but Quickbooks users often need them more than is healthy for data accuracy.

The more you rely on exporting data to Excel spreadsheets, the more vulnerable your financials are to cascading errors in data and book closings, and in lack of compliance.

Reliance on Manual Entry

Because the majority of companies don’t integrate Quickbooks with their other solutions, those businesses suffer, risking wasted time and resources each month with manual billing and data entry.

AP and AR teams need solutions that sidestep the endless CSV files, and hours of rekeying and automate their billing, and transfer data into disconnected systems if they are to adequately handle growth.

Limited Views into Financial Metrics

Because Quickbooks lacks dashboard reporting, fast-moving companies still using Quickbooks are forced to make their decisions based on aging data. This means they risk effective growth strategies for the sake of clinging to what’s familiar.

screenshot of quickbooks app

Slowed Responsiveness to Business Complexities

You may be noticing that Quickbooks technology isn’t so quick anymore. Screens that used to be fast to load, now drag slowly, causing you to wait, and sometimes even shut down and restart just to get a response.

Growing businesses need a financial management solution with features that work with your
data to do more than just spit out numbers.

In a recent TechValidate study*, QuickBooks users who moved to Sage Intacct uncovered a great many of their issues were alleviated after the switch.

A comprehensive solution like Sage Intacct breathes life into your data with:

A high level of data automation to reduce and eliminate manual invoicing, and contract renewals and modifications.
Unique tagging and entry notation features from the chart of accounts to the journal entries, even right down to the transaction, for clearer details, a living history, cleaner audits and more powerful collaboration.
Strong integrations with other best-in-class solutions for data accuracy, better communication between your teams, and more control over your financials.
Customized metrics that with updates in real-time, from one screen, for fast, accurate decision-making and growth strategy design.

If you’re growing, and still using Quickbooks let’s work together to breathe life back into your financials and your growth.

Growth Strategy: Ideal SaaS Metrics for Every Stage

Accounting 101

by Jason Leber | Jul 10, 2018 | Accounting 101

Growth Strategy: Ideal SaaS Metrics for Every Stage

By Paul Johnson
CPA, CGMA, MBA

If your company deals primarily in contracts and subscriptions, listen up. This is important. You probably know that paying close attention to your SaaS metrics is absolutely critical to running your business effectively, but are you looking at the right SaaS metrics? Let’s find out…

a business man working on a tablet going over SaaS metrics

For every growing contract and subscription-based business, the key metrics are Churn, Customer Lifetime Value (CLTV), Customer Acquisition Cost (CAC), Committed Monthly Recurring Revenue (CMRR), and Annual or Monthly Recurring Revenue (ARR or MRR).

SaaS businesses use these key metrics to identify trends, measure against benchmarks, develop strong growth strategy, and make the decisions that help define company success.

However, the importance of these metrics and their roles in company growth and product development will change and fluctuate at every stage of SaaS company growth.

SUPER EARLY STAGE TO EARLY STAGE:

These businesses are focused on defining their product-to-market fit. The metrics they need typically aid in gaining traction as the company advances into Stage A.

This means their most important metrics are typically Monthly Recurring Revenue and Annual Recurring Revenue, and Customer Acquisition Costs, and the Sales and Marketing costs associated with closing deals. They are busy setting the initial benchmarks that will help to define success in the months and years to come.

a man working at a laptop

EARLY STAGE TO GROWTH STAGE:

During Series C, D and up, but not quite at the IPO stage just yet, companies focus keenly on efficiency to stay lean.

Companies here examine Gross Margin numbers. They want to know Customer Lifetime Values of revenue to the business, measured up to what it cost to acquire those customers. How much Churn is the company facing, and who is renewing, which can be tracked in Annual Recurring Revenue.

GROWTH STAGE TO PUBLIC:

At the IPO stage and forward, companies value visibility into revenues versus expenses.

These companies need to measure deferred revenues and earnings before tax, interest, depreciation and amortization (EBITDA) as well as a current, and continually updated window into company expenses and year over year customer growth numbers.

For growing SaaS businesses, working with a scalable cloud-based financial management solution like Sage Intacct allows for an always-current, customizable snapshot into key SaaS metrics, even as they change with every growth stage.

With Sage Intacct, your SaaS metrics extend beyond GAAP to include operational metrics for the bigger picture, all available on board reporting. Your key decision-makers and stakeholders can see critical data whenever it’s needed, so your business is always transparent, and your growth strategies strong.

Give us a ring – we can help make your financial management easier when it comes to growth.

Companies in Motion: The Risks of Standing Still

Accounting 101

by Jason Leber | Nov 24, 2017 | Accounting 101

Companies in Motion: The Risks of Standing Still

By Paul Johnson
CPA, CGMA, MBA

Standing still may be the right thing to do in many business situations, but when your company’s financial systems aren’t keeping up with growth, standing still may be doing more harm than good.

When forward-thinking companies grow rapidly by offering tech-savvy products and services, they soon realize their current financial systems aren’t performing as well as they once did. These companies know they need to move to more relevant software, but often stay with their current, ill-fitting systems for fear of making a wrong decision. These companies might not realize that by standing still, they put their company growth at risk.

business in motion

RISK #1: OUTDATED SYSTEMS CAN’T KEEP UP

As companies evolve to new products and services, their decision-makers find they need new data, answers, and processes. So they build all kinds of spreadsheets and workarounds. In short, their old systems don’t flex well to accommodate their new productivity demands.

RISK #2: CHANGING ROLES REQUIRE DIFFERENT SKILL SETS

Many CFOs see their roles changing, and are good with that, but don’t feel they are operating at peak performance because they aren’t confident their current tools and technologies handling tasks in their new roles. Their old systems are good at solving old problems, but not so good at solving new ones.

RISK #3: DIGITAL GROWTH CAN CAUSE FAST FAILURE

Finally, many businesses have the ideas and desire to grow with technology, but few find fast success because they don’t scale their internal systems to accommodate the new moving parts that come with diversifying their services. Their old systems are holding them back.

THE SOLUTION: GET MOVING

Companies in motion stay in motion and nothing screams yesterday’s technology quite like an Excel spreadsheet. If fast-moving companies are still using them to run their books, they may not be supporting their teams, or projecting an innovative image.

business in motion

They need systems with strong automation that can flex and stretch with more complex compliance standards, and book closings– not another kinda-current report concocted from stagnant data housed on a clunky on-premises system.

They need user-customizable options to handle new products and a greater volume of subscriptions. You know, something that supports frequent and detailed billing and real-time reporting to show deep metrics on varying types of revenue recognition.

They need a cloud accounting system with longevity. Configuration-driven software, like Sage Intacct, maximizes user value compared to other cloud setups that require IT costs and frequent upgrades to stay relevant.

Finally, tech-savvy companies need fast answers, zero downtime, someone else handling updates and security, and not having to hire on more IT staff to stay competitive.

Drop us a line, or give us a call – We can help your business leverage its strengths by guiding you to the right tools your company needs to stay moving!

If You’re Not Early, You’re Late!

Accounting 101

by Jason Leber | Oct 16, 2017 | Accounting 101

If You’re Not Early, You’re Late!

By Paul Johnson
CPA, CGMA, MBA

My dad used to “coach” up the stairs at us in the morning before school with cautionary advice and dad slogans like “jockey into position or get left behind,” and my favorite, “If you’re not early, you’re LATE!”

Well, I am passing on that particular pearl of parental wisdom to you right now because it applies to what we’re facing this year with the upcoming ASC 606 changes. As you might be thinking, “I still have more time,” let other forward-thinking subscription companies remind you otherwise.

We are seeing companies that have clients up for renewal, add-on products to their subscriptions, and companies with a lot of deferred revenue already building the changes into their contracts today. Many recognize that while they are signing on and renewing well before the changes are happening, the contracts they are signing today will be affected as they renew in the coming months or years.

These companies are doing things smart because come January, they won’t be scrambling. They already will have done their legwork, and by the time the regulations are enforced, the changes, to them, will be part of the routine.

What’s Involved?

Trickiness, for sure, but let’s clarify. If you’re a SaaS company with client subscriptions, you won’t just be doing a few tiny contract tweaks to stay compliant. You may also be looking at revisions to the way you do tracking, processes and internal controls.

Here are the 5 main areas where you need to focus for recognizing revenue:

Contracts: More details needed for multiple agreements, modifications, and renewals
Payment Terms: Special renewal terms and variable discounting
Collectability: Minimum thresholds and reseller agreements
Fees: This includes activations and added services
Expenses: Sales commissions and royalties

And here is where you should focus for your revenue recognition to ensure compliance:

Treating multiple contracts with one vendor as one.
Establishing collectability thresholds and track collectible revenue until it meets those thresholds.
Identifying and clarifying your promise to deliver goods or services to your clients. The ASC 606 is expecting that your promise – or performance obligations – are a benefit on their own or with other resources. The new guidelines also expect that the promise to deliver is distinctly separate and identifiable in the service contract.
Itemizing details for transaction price breakdowns – things like refunds, credits, performance-based incentives, bundling discounts, and flexible financing.
Allocating some of the transaction pricing to each performance obligation. Think standalone pricing.

We realize many changes hang in the balance, and these changes are far from simple. Still have questions? That’s okay! Luckily, we know compliance like jockeys know horses, and we would like to know you too, so we can help you get ready for the new ASC 606 guidelines.

Give us a call! We are here to help!

How to Choose the Right Accounting Software

Accounting 101

by Jason Leber | Oct 16, 2017 | Accounting 101

How to Choose the Right Accounting Software

By Paul Johnson
CPA, CGMA, MBA

Lately, it seems like your financials are making things difficult by demanding more work for less accurate data, and forcing your team to spend hours tweaking spreadsheets to get answers you need for strategic decisions.

But changing to a new software solution can seem scary. How do you choose?

To get you started, here are some tried-and-true ideas to help you find the right software solution that will support your company now, and scale with it as it grows.

Know Your Requirements

The best software in the world won’t do your business an ounce of good if you don’t know what your company needs. Know where your current software lacks performance by asking these questions:

Do you see higher operating and maintenance costs to support your on-premises software?
Is staff compensating for the software’s capabilities with too many spreadsheets, or unable to accommodate growth because of software limitations?
Is your CFO able to get accurate data to make informed decisions and strong business strategies?

Next, focus on your company’s functional requirements:

Does your business have multiple entities? Complex hierarchy, or require drum-tight GAAP, IFRS, FASB, SOX or other regulatory compliances?
Is your quote to cash process too slow or do you have a serious disconnection in your time and expense management systems?
Do you need support for AR, AP, order, project or cash management?

Good cloud accounting solutions can speed consolidations, and offer custom dashboard metrics with real-time data. They can also reduce security risks, lower IT costs, and boost productivity. But beware! Not all cloud accounting software solutions are made alike.

Best-in-class software offers solid customization and integration options, while suite software has more of an out-of-the-box feel, which is something to consider when you start weighing your choices.

Do Your Homework

For as many software solutions out there, you can find more companies who sell them. Not doing your homework can lead to a purchase that may have short-term value but lacks the chops to scale with your company for the long haul.

Consider these key tips when evaluating who to partner with:

Build an RFP/RFI that includes your requirements.
Prioritize your wish list into perks and deal-breakers, and focus to avoid unnecessary fluff options that distract from your goals.
Call references, find out what others say about the vendor online, and check out their infrastructure to be sure they meet your needs and standards.

Next, think about your return on investment. For example, choosing a best-in-class solution like Sage Intacct can potentially save your company $120K a year by ramping up productivity. Listen to what the vendor has to say about the cost-saving benefits up against your current expenses to see how that new software solution may offset them.

We get that choosing a new accounting solution isn’t an easy process. So, if you’re ready to start talking about the right fit, give us a ring. And when you do, make sure to run all your questions by us. We’re here to help your financials behave!