Exafort

How BASE’s CFO eliminated hours of financial reporting work each month

What do you do when your business is adding more and more entities, the types of customer payments you accept are increasing, as is volume and complexity, and the amount of time you spend reconciling accounts is growing from chunks of a day to an entire day? You rise up to and meet the changes success is bringing your company with a means of driving growth well into the future.

And how? One word – automation.

This is how Maria Gunter, Chief Financial Officer (CFO) at BASE transformed their business. Scaling volume and reducing complexity with an easy-to-use agile Enterprise Resource Planning (ERP) solution was the only option. BASE is a fast-growing Austin, Texas based private investment firm that builds assets. Their expanding line of brands includes MOVE Bumpers, Espresso Parts, NORTH Lights, and WAGONMASTER.

Let’s hear about this transformation in her own words:

“We’re always looking for more automation.”

When eCommerce website changes were introducing risk to their revenue recognition, Maria knew they had to “make a change and do things differently.” On top of this, UPS changed their billing where they would not bill until the product was delivered.

“It shifted from getting information too early to getting information too late,” noted Gunter. The need for real-time data and full-scale workflow automation was beyond what QuickBooks could handle, so they began looking for a QuickBooks alternative.

“I was like, I don’t want to have to hire a person.”

The BASE Sales team had become accustomed to relying on real-time data to see how they are tracking toward their quota. Additional incentives at BASE meant they needed to see their sales dollars to see how they were tracking toward earning these incentives. And with the aforementioned changes, unless Maria’s team spent a majority of their time manually reconciling the accounts, the Sales team would not see their dollars until the end of the month, basically when it was too late to dig in and impact their numbers.

By moving from QuickBooks to Sage Intacct, BASE has been able to absorb the changes and confidently meet the challenges of growth by automating workflows and revenue recognition, and by bringing all of their data into a central location. Now with Sage Intacct, the BASE Sales team can access their real-time sales data on their dashboards any time they want. And Maria and her team, well, they are able to handle increased volume without having to hire.

“Sage Intacct just made it a lot faster.”

Maria knew she also had to automate revenue recognition to include the revenue in their Shopify eCommerce channel. Sage Intacct Marketplace Partner APIWORX worked with BASE on each business scenario to integrate and automate the entire business process and remove all manual data entry work with a seamless integration between Shopify and Sage Intacct.

By bringing the data into Sage Intacct, BASE created a single source of truth for a comprehensive real-time view of revenue while also automating revenue recognition all within a secure financial framework with anytime anywhere access.

“As we go through the month, we know where we are with regard to our revenue target. We don’t have to wait a week for accounting to get all the UPS bills and go through all the Shopify data and verify everything,” commented Gunter.

“The more real-time we can get, the more meaningful our data becomes.”

One of BASE’s entities, MOVE Bumpers, tends to have a high number of order changes. Gunter noted: “On the customer service side, they were just doing what was right for the customer and we never gave a thought about how that information might flow through a system because it wasn’t flowing through a system before. We had to create some business rules and change our internal process to provide more clarity on what was happening then flow the changes through with the APIWORX integration to be reflected in both Shopify and ShipStation.”

The integration further flows the data into their Sage Intacct order and inventory management processes and maintains the data integrity needed for accurate and timely reporting.

“We’ve eliminated about 100 hours of reporting work each month…”

“We keep asking, how could we be using this better,” commented Gunter. “Every 30-minute task you eliminate adds up over time. Financial reporting was a big one we were spending a lot of time on. We’ve got all these entities and we’re a pretty small team so we’re big on automation.”

For example, now to see spend-by-vendor across all companies, rather than cobbling 22 reports together, their former QuickBooks method, it takes around five minutes to gain a single pane view of the data. “We’ve eliminated about 100 hours each month by automating many 30-minute tasks across the team and eliminating the need to manually consolidate data,” she added.

As CFO, Maria is positioning BASE for continued success by building the framework with Sage Intacct to confidently be able to scale for growth, remain agile for change, and keep costs low with efficiency and automation.

Quickbooks’ shortcomings are holding you back

If you’re using QuickBooks Desktop, you have a problem, and chances are you’re aware of it if you plan to stay competitive in the digital age. According to a new tech dossier on QuickBooks from CIO, “businesses outgrowing the capacity of QuickBooks should factor cloud migration into their plans for transitioning to more powerful software.” Many of you are ready to make a change, according to CIO’s recent research on the attitudes of senior financial executives at small and medium businesses toward their existing finance and accounting software and their desired areas of improvement.

QuickBooks: What Its Users Say

Two recent surveys of current QuickBooks users help define some of its shortcomings. CIO, one of the leading publishers focused on business technology and digital transformation, released a tech dossier based on a survey of 207 QuickBooks users. These users represented a wide range of industries in the SMB segment, with an average of 358 employees.

The top challenges reported with QuickBooks were:

  • Suboptimal speed and efficiency
  • Limited data integrity checks
  • Limited customizability

Half of SMBs who use QuickBooks said they would like to see better reporting capabilities, followed closely by the 45% who want more accurate data and 44% who see the need to improve efficiency and/or reduce costs.

Among the other QuickBooks frustrations are:

  • Lost productivity due to time-consuming manual processes
  • Staying current with compliance and security requirements
  • Aggregating data from multiple systems and sources

The second recent survey, conducted by CFO Dive, found similar results, all captured in a new report entitled How QuickBooks isn’t Keeping Pace with CFO Needs. CFO Dive spoke with 164 financial executives and found that three out of four finance executives say going back and forth between QuickBooks and spreadsheets is frustrating for their financial teams. Finance executives use these spreadsheets to get the information and reporting they need in their daily work, which points out a significant shortcoming in QuickBooks reporting.

In addition, these survey respondents noted additional QuickBooks challenges, including:

  • Data accessibility issues (29%)
  • High occurrence of imbalances/troubleshooting (27%)
  • Too much manual data entry and reentry (26%)
  • Upgrades/maintenance (26%)

Both surveys reinforce the benefits of moving to a cloud-native financial management platform rather than using a lightweight online version of desktop software.

As CFO Dive found, certain triggers usually signal companies are outgrowing QuickBooks and moving to a robust, modern, cloud-native solution. These include:

  • Spending too much time on spreadsheets
  • Multiple business entities with no consolidated charts of accounts
  • Seeking outside investment that would require you to be GAAP-compliant
  • Remote data access requirements

CIO noted the following in its tech dossier: “Monolithic software is challenging to update and troubleshoot because the entire application must be put on the operating table. That’s why software makers have historically updated their products no more than once or twice a year. Even relatively small bug fixes can require a complete reinstallation and test cycle.

“Modern, cloud-native software takes advantage of cloud constructs to reimagine how software is built. Microservices are loosely coupled software components that each perform a specific task. Developers can chain services together to build sophisticated applications much more quickly than they could in a monolithic environment. Each microservice is tested and optimized for performance.”

You can read more about these reports by following these links – CFO Dive survey, CIO Tech Dossier. These posts go into further depth with links directly to the reports.

Moving to the Cloud

For many of you using QuickBooks Desktop, the notion of replacing it with a cloud platform might sound crazy. What you have today seems to work. But there may come a point when the benefits of a cloud-based platform make sense. Cloud-based solutions have lower upfront costs and capital expenditure, faster deployment, and easier administration.

Cloud-native financial management platforms combine the customizability of on-premises offerings with 24×7 access, higher security, and lower cloud maintenance. Cloud-native solutions deliver the full benefits of the cloud due to their use of cloud technology, de facto standards, and open APIs. They are easier to integrate, scale, and adapt, delivering confidence and a flexible system to meet your future needs.

QuickBooks Sells Professional Services Short

Professional services organizations are diverse. They provide a vast array of services have widely varying customer bases, and different models of service delivery. What professional services organizations have in common is how they generate revenue – they sell services in the form of consultants’ time. These organizations are also unified by a need for accurate project billing, detailed reporting, and business-process automation to maximize their operations.

What professional services organizations don’t need is QuickBooks. Instead, these organizations need a QuickBooks alternative that can help them boost revenue, improve customer satisfaction and make strategic data-driven decisions. Don’t take my word for it, but instead, learn the benefits that some former QuickBooks users now enjoy that improve project billing, reporting, automation, and application integration.

QuickBooks Comes Up Short for SaaS Companies

SaaS companies need financial reporting and forecasting to expand and scale, especially as they look for funding or seek to take the company public. There is efficient and effective software out there that provides what SaaS companies need to grow, and QuickBooks is not one of them. QuickBooks simply cannot offer the same level of detail and accuracy needed, with dimensions, recurring revenue, and forecasting. 10 reasons why QuickBooks is the wrong call for SaaS companies, especially as it relates to:

  • Revenue recognition
  • Subscription contracts
  • Financial controls
  • Forecasting
  • Application Integration

QuickBooks Users Depend on Spreadsheets

Spreadsheets and finance have gone together for decades. Accounting directors, managers, controllers, and CFOs have mastered the complexities of Excel. VLOOKUP, INDEXMATCH, pivot tables and reporting, macros, Excel visual basic, and data simulations are all advanced tools accounting departments have employed to get information out of complex spreadsheets.

Useful as they are, spreadsheets are a crutch and a weak one at that. And if you’re using QuickBooks, you don’t have a lot of options other than using spreadsheets to get the information you need to make data-driven decisions. Fixed-asset management, consolidation, and revenue recognition are just three of the areas where QuickBooks falls short. If your current accounting solution forces you to use spreadsheets to get the insights you need, it’s time to look for a better alternative.

The Hidden Costs of QuickBooks

Most small businesses begin their financial lives using Intuit’s QuickBooks. With more than 80% market share, it is by far the most popular small business accounting application. It’s well known. It’s easy. It works, and it offers the functionality a business needs when it’s starting out.

If your business has moved beyond the entry-level, your organization may be facing several challenges as you hit QuickBooks limits. It wasn’t designed to provide professional financial management capabilities to growing organizations with sophisticated, evolving demands. How do you know when it’s the right time to make the move? Which options should you consider? What are the hidden costs of waiting? How can you measure the costs against the benefits?

QuickBooks Reporting Can Kill Your Business

Is QuickBooks killing your business? QuickBooks might be a good option for some organizations, but there may come a time when you outgrow its reporting capabilities. While manual reporting in spreadsheets can be sustainable for a while, a reporting solution that doesn’t grow with your needs can actually stunt your ability to make quick decisions and the best strategic choices for your organization.

What are the downsides of limited reporting? Consider the impact of poor visibility on costs, profit, and loss. This can result in decreased market share and missed revenue and growth opportunities, as you don’t have the information you need to grow and react to market changes and opportunities. Lacking real-time data, you’ll make less informed decisions. You can lose your competitive position and end up with dissatisfied customers. Your colleagues will lose their confidence in senior leadership. Poor decisions can mean the difference between business growth and failure. Is it worth it?

A better reporting solution gives you more insight and visibility into your data and gives you the tools to make better decisions with improved strategic planning. You’ll have what you need to optimize margins and pricing and to increase time-to-market with better market fit. The right information at the right time can help you increase shareholder value and market share.

How construction firms can collect and distribute key data to deliver on KPIs

It’s no secret that the pandemic has caused a rapid acceleration of mobile work for the US construction industry.

In the past, back office staff, often working on-site, would be vital in processing physical documents and helping to manage authorizations.

But in the ‘new normal’ world of reduced physical contact and mobile working, teams across multiple trades and services need to ‘self-serve’ administration on projects.

The best way to control potential risk and cost in mobile teams is to implement a management system that generates a ‘single version of the truth’ with maximum data visibility and processes across disparate groups of staff and subcontractors.

By enabling people to input data, you can reduce time and cost, track and mitigate potential problems, create a digital ‘paper trail’ to streamline critical reporting, understand performance, build resilience, and develop actionable insights.

Read this article to learn how to digitalize your construction business and how a data-led approach could be your secret weapon for maximizing performance, productivity, resilience, and profit so you can successfully deliver on your key performance indicators (KPIs).

Why data is so important

In an industry as complex and interconnected as construction, businesses should be cautious about going with a gut feeling and instead look to data to make robust decisions and optimize resilience.

Data-driven organizations are three times more likely to report significant improvements in decision-making than those that rely less on data, according to a survey of more than 1,000 senior executives conducted by PwC.

Harvard Business Review adds that this approach enables you to make more confident decisions, be proactive, and realize cost savings.

In addition, businesses that implement digital practices have seen savings of up to 20%, according to McKinsey.

That’s a statistic to take seriously when the construction industry has long-suffered margins of around 2%, where even small slippages in time or cost can have knock-on effects that determine whether you make or lose money on projects.

With the benefit of insight and digital systems, you’ll be able to spot patterns and trends, helping you to navigate a business landscape and get ahead of the competition as COVID-19 continues to reshape the industry.

Data to collect and distribute

Most construction firms are familiar with Lean working – a way of systematically reducing waste from every stage within a business.

To support this and minimize costs and risk, it’s sensible to collect and manage data relating to the seven main areas of waste: transport, materials, waiting, motion, re-work, overproduction, and over-processing.

You’ll also need to collect and analyze day-to-day data relating to critical aspects around approvals, budget control, and work in progress (WIP), including:

  • Health, safety, environment, and quality (HSEQ): Details of accidents and near-misses.
  • Actual costs: Estimates against actual cost, details of purchase orders, and evidence of materials delivered to the site.
  • Materials and labor: End-to-end paper trail of purchase orders and approvals, hire of plant and subcontractors.
  • Task management: Copies of all critical policies and procedures.
  • Time: Including timesheets, holidays, and absences.
  • HR: Disciplinary records, the HR calendar, and file copies of qualifications and certifications.
  • Phasing: Details and completion of specific phases – which impact other teams.
  • Management reports: Cover details the management team needs around budgets, project timelines, and KPI tracking.

Being able to distribute that data in real-time will help your firm to track KPIs and identify issues as they arise, rather than discovering problems further down the line – that could harm budgets and timelines.

How technology can help with data collection and distribution

Collecting data via manual processes can result in errors, teams working in silos, and project delays, which can be detrimental to the objective of achieving KPIs.

By using technology, your construction firm can stay on track, and your staff can work more effectively.

Here are a few examples of how technology can help your firm when it comes to data collection and distribution:

  • You can view data according to the project, current stage/phase, and type of materials used.
  • Supporting technologies such as barcode recognition and mobile apps can be used to manage documents.
  • You can generate real-time data on individual equipment hires, labor costs, hours worked, accidents and incidents, compliance status, and projected vs actual costs.
  • You can create reports within a few clicks about specific financial workstreams within your business – according to project stage, month, individual, or material type.
  • You’ll be able to compare estimated vs actual costs to ensure your business stays on track.

How to help staff adapt to new data collection methods

When adopting new systems and processes, getting your team on board and providing them with the right skills will help. Here are four steps you can take:

1. Communicate

From the start, clearly explain what you’re trying to do, and get input from everyone involved to maximize engagement and support for new systems, rules, and processes.

This will save you a lot of effort in the long term.

2. Provide support

People will unlikely master new apps and processes for the first time. Check-in, solve problems and provide refresher training where needed.

3. Keep things flexible

Give people the option to ‘self-serve’ where and when needed. That means offering browser and mobile app versions of any business system, which are operational 24/7 to meet individuals’ needs.

4. Digitalize the distribution of information

Give everyone access to a single business information platform, and you can instantly communicate with staff and contractors.

This removes the need for face-to-face communications or physical newsletters.

Final thoughts

There’s no doubt that coronavirus is reshaping the construction industry. While providing challenges, it’s also creating new ways of working – for the better.

Technology can help your firm tackle these challenges head-on – and when it comes to delivering on KPIs, using the proper solutions will allow your staff to collect and distribute critical data effectively.

How data transparency puts restaurant operators in control

This year has been a tough one for many restaurant operators. In its 2023 State of the Industry report, the National Restaurant Association found that exactly half of all operators expect to be less profitable than the previous year. While consumers still love restaurants, economic headwinds force many to cut back on discretionary spending, and restaurants are experiencing higher prices for line items that include food, labor, utilities, and occupancy. Operators are doing what they can, but rising costs and fewer customers are like a vise with mounting pressure on all sides.

While nearly all restaurants are raising prices, changing menu items, and cutting back on other areas to move closer to profitability, these actions raise the question of how decisions are made. No one alive today has previously faced the unique challenges of a pandemic coupled with inflation, so doubtlessly, many operators are making gut decisions based on their own experiences. However, there is a group of savvy restaurant operators who are making data-driven decisions that guide their actions to:

  • Improve revenue and margins
  • Increase guest satisfaction
  • Decrease costs
  • Improve efficiency

Data Transparency Relies on a Common Backbone

With multiple data sources flowing through a restaurant operation, it’s essential to ensure that maintaining visibility isn’t time-consuming. A flexible, open API in a modern financial management system allows real-time integrations with all data sources, including legacy or third-party systems. This creates a complete picture of operational performance. Synthesizing that data into a single source of truth gives restaurant operators the information they need when they need it.

A robust reporting solution gives insight and visibility into data and delivers the tools to make better decisions. Restaurant operators will find what they need to optimize margins and pricing and better meet guest requirements. Access to real-time data helps restaurants react faster and solve any problems more quickly. Improved visibility and reporting in real-time let restaurant operators rapidly analyze data and isolate any issues with numbers, locations, or menu items. This enables deeper dives into transactions to determine where problems occur. Furthermore, with customized dashboard features, restaurant operators have better visibility into financial performance in real time and can drill down and get answers quickly without relying on the finance team. This transparency and detail allow them to make better decisions faster than waiting weeks after the monthly close.

Pulling all this together requires a solid financial management system as a platform backbone. A single connected system helps eliminate time-consuming manual processes and takes full advantage of the connectivity and digital features of today’s smart devices and applications. Implementing automated digital operations for functions such as timesheets, inventory, and guest receipts can improve efficiency, enhance accuracy, cut costs, and prevent revenue leakage. As well, automation reduces errors and improves accuracy. Automation enables better integration with other business applications and suppliers and allows for the bidirectional sharing of information so restaurant operators can better manage their supply chain and transactions.

What the Data Can Tell You

According to industry benchmarks, prime costs (cost of goods sold and labor) make up about 60% of a restaurant’s expenses. While that may seem high, lower premium costs may indicate poor quality and service. Staying in control of your prime costs starts with consistent and routine monitoring.

The cost of goods sold (COGS) measures food and beverage expenses. Integrating an inventory management system with a financial management platform that tracks accounts payables allows a data-driven restaurant operator to compare each line item and category period-over-period, so problem areas are quickly identified. For example, if the cost of a particular item is too high compared to the budget, it might be time to renegotiate with the current vendor or seek a different supplier. Also, the issue might be that employees are inaccurately measuring ingredients and more training is required, or the issue might be that menu items are priced too low. Taking corrective actions starts with precise insights to know where to start. As a key performance indicator, COGS can be displayed as an easy-to-read dashboard with drill-down capabilities to examine each dimension for further examination. This provides real-time visibility into COGS to help make data-driven decisions.

The same discipline can be applied to the other significant components of prime costs. Labor should be calculated as a percentage of total sales spent on salaries, wages, and benefits. Staff, such as host stands, restaurant servers, kitchen staff, and management, can be assigned to unique categories. A data-driven restaurant operator can easily see what’s driving costs by creating different reporting dimensions. Drill into these dimensions to generate labor reports that show whether your restaurant is staffed at the proper levels for the correct times of the day so you can course-correct if needed.

By integrating your point-of-sales and reservation systems with a financial management platform, you can further quantify areas that include:

  • Average check to measure the average amount spent by customers in the restaurant.
  • Occupancy rate measures the percentage of seats in the restaurant that are occupied at any given time. It can help operators optimize seating arrangements and staff levels.
  • Table turnover rate measures the number of times tables are turned over a given period. This helps determine how many customers you can serve during a specific timeframe.

You Can’t Manage What You Don’t See

Start by defining your restaurant’s goals and what is most important to your overall strategy. Balance this approach with measures that reflect the complete picture of your restaurant’s health and program impact. Measuring and reporting outcomes will require extra effort. But doing so brings immediate and long-term benefits.

Automating for growth: Unleashing your business potential

How to overcome inefficiencies

The role and responsibilities of the modern CFO extend far beyond the day-to-day financial challenges of running a business. Today, it’s no longer enough to play the traditional role of finance leader. To deliver value as your role evolves, you must show resilience, demonstrate more active leadership, and build skills in other areas of the business.

Today’s CFOs are responsible for much more than finance

Being an effective financial leader requires a deep understanding of your organization and the ability to apply that knowledge to guide your people on the path to success.

Additional demands 

For many financial leaders, the current economic uncertainties and upheavals have resulted in additional organizational demands—from firefighting crises and preserving cash to assessing risk, redesigning financial plans, and revising forecasts.

“Today, the role of the chief financial officer (CFO) is under greater scrutiny, internally and externally. CFOs face never-ending pressure to cut costs, grow revenue, and ensure control.” DELOITTE.

The desire to fulfill ambitions

The expanding roles and responsibilities demanded of financial leaders today can leave you needing real-time data to confidently drive your decisions. You also need accurate insights to understand what’s happening in your business in seconds—and be able to apply that understanding to affect positive change.

With the right data and insights in place, you can look ahead and prepare for the future rather than looking in the rearview mirror. You’ll be empowered to fulfill the ambitions of your business, drive growth, and be ready to follow the path to success. So, what do you need to get there?

Removing common frustrations

Outdated legacy finance systems and processes for budgeting and accounting

can be a significant cause of frustration for today’s financial leaders.

Let’s take the close process as an example. Recent research found that 92% of CFOs feel frustrated by the time it takes their business to close, the human resources needed to manually consolidate data from multiple sources—and the lack of business impact.

Such outdated and manual processes can result in a loss of productivity and wasted time as your teams work through reams of financial records and different databases. It also means your business risks making mistakes throughout the process as data integrity and security aren’t prioritized. In worst-case scenarios, your data can become vulnerable to cyber security attacks.

The end of overwhelm

Fear of missed deadlines, the sheer volume of work needed, and the risk of making serious errors can all overwhelm CFOs—and that feeling is only heightened when audit season or budget forecasts add to the pressure.

Additional frustrations can be found when financial leaders explore the limitations of their current solutions and providers—and the time taken up by financial reporting.

Overcoming inefficiencies

Businesses relying on spreadsheets can expect to lose around 10 hours weekly on manual data entry and correction. In addition, they cannot fulfill reporting requests outside their regular reporting periods. Compare this with the 79% close time reduction reported by businesses that have the right technology in place, and it’s clear that storing data in different places and formats presents a real challenge.

Financial leaders can find themselves stuck with significant gaps in their insights and operational efficiencies without the ability to see the numbers in the format they want, when they want. They can even incur additional costs when they invoice other businesses and try to get paid on time.

Empowered decision-making

Ambitious financial leaders must be able to analyze their financial and operational data and gain the vital insights they need to make informed management decisions. In addition, fast-growing companies need the ability to manage multiple locations and entities. Only then can CFOs begin to manage, improve, and grow their businesses.

An opportunity to look at the bigger picture

When CFOs can look ahead, their reliance on outdated legacy systems and time-consuming manual processes to scale and drive their business performance becomes unsustainable.

Add to this the need to feel in control amid economic uncertainty and climate change. For CFOs to futureproof their organizations, they need to be able to adjust, pivot, and grow—especially in preparation for any planned acquisitions.

Accelerated growth

This is where the cloud and new technologies can help forward-thinking CFOs accelerate their growth and functionality across the organization.

With the adoption of new technologies and tools like paperless automation, financial leaders are freer to focus on strategic thinking. In addition, they have the time to connect with like-minded peers outside the business to shape their industries, reduce the stress and pressures of managing confidential business data, and create a better balance between work and home.

Helping business flow

The right technology and advanced reporting can enable financial leaders to focus on strategy and keep their businesses ahead of the accelerating pace of industry change.

Choosing a system with extended functionality and multidimensional reporting that slices and dices data in seconds will give you back valuable time. Spend it making the most important decisions for your business—all without the limitations of spreadsheets.

Your financial teams can complete streamlined multi-entity consolidations with automated inter-entity eliminations in minutes instead of hours, freeing them to drive strategic initiatives that will help your business flow.

Futureproofing businesses 

With the data you need to budget and forecast accurately, optimize your preconstruction and operations costs, and power your inventory management, you can expect to improve your productivity by as much as 65%. With the right technology, you will reduce costs and make better strategic decisions that will futureproof your business. Experience the transformation in your role and enjoy time-savings that will ensure you have space to think clearly and decisively.

Optimizing SaaS forecasting and budgeting to slash uncertainty

Cash is royalty, and you MUST be smart in how you manage it.  Unfortunately, SaaS budgeting and financial planning is complicated by the many moving pieces conspiring to make financial certainty elusive: user trends and sentiment, broader economic uncertainty, unique regulatory stipulations, and other factors, to mention a mere few.

In this post, we’ll explore how budgeting and forecasting combine to reduce financial uncertainty for SaaS CFOs. We’ll also discuss the importance of planning for the unexpected, accounting for deferred revenue, enhancing your data integration, and much more.

We’ll start by analyzing one of the most important relationships in the world of SaaS finance.

How does budgeting and forecasting help SaaS companies reduce uncertainty and boost ARR and MRR?

Budgeting and forecasting work in tandem to help SaaS companies minimize uncertainty and improve their growth rate, but they do so in different ways. Budgeting helps finance leaders allocate resources for a given period, ensuring there’s sufficient capital for each department’s various projects. Budgeting plays a crucial role in risk management by helping SaaS companies make sure they can handle the fluctuations that can take place in any subscription revenue business.

Forecasting has strategic implications for the budgeting process and reducing overall uncertainty, but has slightly different objectives. These include:

  • Projecting revenue growth: Being able to chart your likely monthly revenue and annual recurring revenue (ARR) is integral to both SaaS budgeting and broader FP&A. Similarly, forecasting also helps you anticipate new customers, revenue contraction, and other financial trends.
  • Optimizing the billing process: Selecting the best SaaS billing model for your company is essential in reducing long-term uncertainty. Seamless and strategic billing plays a large role in keeping churn to a minimum by providing a great customer experience. Automated forecasting makes it easy to compare the long-term results of different billing models, and automated reporting helps you see which of your current billing options customers prefer.
Billing and payment data for a SaaS company.
  • Helping you manage cash correctly by growth stage: As a SaaS CFO, you’ll have different priorities and goals depending on what stage of the business lifecycle you’re in. Are you pre-seed or seed and trying to establish a product-market fit? Or are you more mature and working on finetuning your revenue model or even expanding internationally? Forecasting helps finance leaders navigate each growth stage optimally.

By combining SaaS budgeting and forecasting, CFOs can make informed decisions, adapt quickly to changes, and stay competitive. Let’s peel back a few more layers. How else can this symbiotic pair of financial processes improve your company’s financial performance by reducing uncertainty?

Planning for the unexpected with accounting automation

Planning for the unexpected is crucial for SaaS companies. Extrapolating market trends and historical data into the future is one of the major ways forecasting reduces uncertainty for organizations. Automated forecasting also makes scenario planning as simple as entering your starting data and clicking a button.

Revenue forecast data for a SaaS company.

Running “If-then” scenario tests is central to reducing doubt about your company’s financial future. What if there’s a sudden large-scale churn event? Will your cash on hand cover your needs while your subscription revenue recovers? Question-based scenario testing is one of the best routes to certainty for finance leaders.

Accounting for deferred revenue through SaaS forecasting

Since SaaS companies recognize revenue in a unique way, accounting for deferred revenue through SaaS forecasting is vital. Managing the demands of ASC 606 is a big piece of that, and is a much smoother experience with the help of financial automation.

ASC 606 revenue recognition data for a SaaS company.

By accurately forecasting deferred revenue, finance leaders can manage their cash flow effectively and avoid budget shortfalls.

Risks of spreadsheet-based budgeting and forecasting

Manual budgeting and forecasting processes pose significant risks to your department’s effectiveness and the health of your whole organization. Manual processes are time-consuming and prone to errors that need to be corrected, wasting even more time and cash. Manual methods don’t allow for real-time updates or adjustments, and inaccurate budgeting and forecasting can lead to financial instability and missed growth opportunities.

None of this bodes well for SaaS companies. Let’s check out financial automation for comparison purposes. Is it better at slicing uncertainty down to size?

Benefits of automating your SaaS budgeting and planning

Automating your SaaS budgeting and FP&A benefits your business in several important ways. Let’s review some of the most important of those.

Slashing manual financial processes. 

Automation eliminates manual data entry and calculations, resulting in greater accuracy and reliability.

Centralize your data and streamline workflows.

Integrating all your CRM, ERP, and billing data into a centralized system ensures seamless SaaS forecasts and eliminates the risk of errors.

Unlocking real-time insights and more robust forecasts.

Automated budgeting and planning provide real-time visibility into your SaaS revenue and financial performance, enabling you to make data-driven decisions. Automated forecasting models can generate lower-variance revenue projections by effortlessly incorporating historical data, market trends, and various SaaS metrics.

Investing in automated software solutions for SaaS forecasting and budgeting can significantly enhance your department’s financial planning and growth prospects. However, not all accounting suites are on equal footing.

Cloud-enabled vs. cloud-native financial planning software (and why the distinction matters for your finance team)

Cloud-native and cloud-enabled SaaS budgeting options may sound similar, but there are some essential differences that CFOs need to consider before making a purchase. Let’s briefly compare both types of tech.

1. Cloud-enabled accounting software

Cloud-enabled SaaS budgeting refers to a traditional budgeting solution re-hosted in the cloud. This is known as a “lift and shift” application. Although it sounds innovative, it’s more of a jerry-rigged approach than a true innovation. In practice, cloud-enabled software often isn’t up to the complicated automated workflows that modern SaaS accounting requires.

2. Cloud-native accounting software

On the other hand, cloud-native SaaS budgeting solutions are specifically designed for cloud use. They offer much more flexibility, scalability, and real-time data integration. And unlike cloud-enabled solutions, you’ll never get halfway through a forecast model and suddenly have the whole thing short out on you.

Trusting your company’s budgeting and FP&A to cloud-enabled solutions could ultimately produce more uncertainty instead of less. What else should you consider if you’re looking to embrace automation to maximize your budgeting and FP&A results?

How to automate SaaS budgeting and FP&A

Automating SaaS budgeting and financial planning is essential for helping departments streamline processes and ensure accurate revenue projections. Collaborating with key stakeholders is vital for anything affecting the budgeting process. Budgeting and FP&A impact every team at your company, so even a positive change like automation needs to be discussed inclusively.

But going deeper, what do you need to be mindful of as a SaaS CFO while automating your company’s budgeting and planning?

Integrate CRM, ERP, and billing data for seamless SaaS forecasts

Integrating all CRM, ERP, and billing data is crucial for reducing uncertainty with seamless SaaS budgeting and forecasts. By centralizing and analyzing customer relationship management (CRM), enterprise resource planning (ERP), and billing data, you have all the data you need for decision-making in one spot.

Financial data integration enables accurate revenue forecasting, efficient resource allocation, and optimized marketing efforts. Cloud-native accounting software automatically pulls all your data together in the deployment process.

Identify vital KPIs (and potential problems) for optimized SaaS forecasting

You need to identify the key profit drivers behind your business to fine-tune your forecasting and ensure low-variance predictions after the switch to automation. You can make truly impactful decisions by delving into factors such as customer acquisition costs, churn rates, and average revenue per user, and determining which one has an outsized effect on your company’s performance. Automated role-based dashboards put all the metrics you need right at your fingertips.

After identifying your profit drivers, remember to prioritize them in your forecasting efforts. Additionally, analyzing historical data and mapping out trends while they’re still young allows you to uncover underlying issues or areas for improvement.

Use SaaS metrics to predict bookings, downgrades, churn, and more

Remember to forecast expansions and upgrades, downgrades, and churn in your SaaS business by leveraging the correct metrics. Automated forecasting is extremely powerful, but it’s only as effective as the data you feed it.

Specifically, remember to leverage these core KPIs:

  • Expansion & contraction MRR: Your monthly recurring revenue (MRR) tells you the amount of committed subscription revenue you have each month. Your expansion and contraction MRR are essential subsets of that. Expansion MRR tells you how much money you gained in a given month through subscription upgrades and account expansions, while contraction MRR tells you how much you lost to downgrades.
  • Voluntary & involuntary churn: Churn occurs when a user unsubscribes from your service, and there are two different types. Voluntary churn is when someone purposely unsubscribes, but involuntary churn occurs when a user’s payment method lapses and they fail to update it on time. Automation plays an important role in minimizing both varieties of churn.
  • CAC to CLTV ratio: A SaaS company’s customer acquisition cost (CAC) indicates the average cost of obtaining each customer, while the customer lifetime value (CLTV) tells you how much each customer spends before churning. Both are essential metrics in their own right, but an outstanding CAC to CLTV ratio is the true benchmark of superior performance.

Now we’ll look at five actionable tactics you can use to slash uncertainty for your SaaS business.

Forecasting and budgeting to cut uncertainty: a quick template for CFOs

Now that you know more about automating your SaaS budgeting and financial planning successfully, here are five tips for cutting financial uncertainty through forecasting and budgeting.

1. Plan accurately for revenue recognition on multi-year contracts

Accurately planning for revenue recognition on multi-year contracts is essential for SaaS companies. These contracts can be complex, as revenue recognition may occur over a long period with multiple layers of service obligations to consider. Automation makes it easy to keep track of deferred revenue waterfalls and their impact on your budget.

Deferred revenue data in an automated accounting suite.

CFOs need to carefully review the terms of these contracts and determine the appropriate timing and method of recognizing revenue. Be mindful of potential changes or risks that could impact the revenue recognition process: contract amendments, changes in market conditions, or similar factors. By accurately forecasting and budgeting for revenue recognition, CFOs can reduce uncertainty and ensure their business remains financially stable.

2. Centralize and automate to eliminate shadow IT

One of the most important reasons to integrate and automate your financial data is that it helps you boost your cash flow by cutting shadow IT. Any application that your company no longer uses but unintentionally keeps paying for is considered shadow IT.

Enterprise subscriptions can get quite pricey, and neglecting even a few recurring subscriptions can produce a sizable hit to your cash flow. Centralizing your data in the cloud puts everything in front of you, allowing you to see what you need and don’t.

3. Get granular about your pipeline performance and your various sale cycles

Analyzing and breaking down your sales cycles into smaller segments allows you to identify trends, patterns, and key metrics that impact your sales performance. This enables you to make data-driven decisions based on the specific dynamics of each sales cycle, including seasonality, customer behavior, and market trends.

Also, give your pipeline a closer look. Are there parts of it that are converting particularly well, or any spots that could use some help?

4. Aim for a slow burn (especially in a recession)

Your SaaS company’s burn rate is one of the most essential metrics for ensuring positive cash flow. Essentially, your burn rate tells you your total expenses: how much money are you spending each month, and how long can you keep that up with the cash you have available?

5. Think ahead and prioritize seamless scaling

When scaling your SaaS business, thinking proactively and planning ahead for seamless growth is essential. By selecting SaaS solutions built to accommodate future growth and increased demand, you can avoid the constant need to switch and upgrade software.

Get revenue forecasting and budgeting advice from SaaS finance and accounting pros

Optimizing your revenue forecast activity, sales pipeline projections, and budgeting processes are all essential to cutting uncertainty to the absolute minimum. For SaaS CFOs, automation is the most straightforward pathway to doing that because it integrates your data, finetunes your forecasting, and equips you with robust financial analytics all in one fell swoop. But do you and your team know how to work with these tools in the first 90 days post-deployment and beyond? How to scale in a sustainable way that matches the needs of your growth stage? How to confidently build and forecast different billing models?

All of this plays a central role in reducing financial uncertainty for SaaS organizations. If you want to learn more about managing uncertainty and winning your market, the Modern SaaS Finance Academy has what you want. Featuring dozens of cutting-edge digital lessons taught by SaaS finance and accounting pros, you’ll learn everything from automating and forecasting different billing models to building the ideal tech stack, mastering financial storytelling, and much more.

You can start learning today by clicking here.  Patterned off the success of the Hubspot Academy, but for SaaS CFOs, Controllers, RevOps, FP&A, and CEOs, it is free and offers the option of CPE credits.

Biases in Enterprise Resource Planning (ERP) consultants

Enterprise Resource Planning (ERP) systems are crucial in managing most business processes, making the selection of an ERP system critical for organizations.

Navigating the myriad ERP solutions, many companies or CFOs hire ERP selection consultants for their expertise, often paying $20,000-$100,000 in the middle market for help picking the right system for their needs.

However, these consultants, like any other professionals, are susceptible to biases that influence the outcome of the selection process. Some are so biased they act as paid spokespeople for a particular vendor.

In this blog, we will explore five biases that can arise in ERP selection consultants and their impact on the decision-making process.

1. Vendor affiliations create a conflict of interest: ERP selection consultants often have established relationships with specific vendors or resellers. These relationships can create a bias toward recommending those vendors, even if they may not fit the organization’s needs best. Consultants often receive financial incentives or perks from vendors, consciously or subconsciously affecting their recommendations.

Most common is the same ERP selection consultant being paid to implement the chosen software, adding thousands of dollars of revenue for themselves if a particular vendor is selected over another.

It is important for organizations to be aware of these affiliations and question the motives behind consultant recommendations.

2. Preconceived notions about industry standards: ERP selection consultants may have preconceived notions about industry standards and best practices. While experience and expertise are valuable, rigid adherence to industry norms can lead to overlooking alternative solutions that could better fit a particular organization.

Consultants must remain open-minded and consider diverse options to ensure an unbiased selection process.

3. Confirmation bias: All people, including ERP selection consultants, may develop a bias towards confirming their initial beliefs or assumptions. This bias can hinder exploring alternative options and limit the range of choices presented to the organization.

Organizations should require consultants to share what percentage of their client base chose each available ERP solution. If they always recommend the same solution, what are you paying for?

4. Limited knowledge or experience: ERP selection consultants may lack comprehensive knowledge or experience across various ERP systems. Requests from consultants new to a particular industry or unfamiliar with best-in-class cloud functionality available. This limitation can lead to biases favoring solutions they are more familiar with or have previously implemented.

Organizations should ensure that consultants have a deep understanding of various ERP systems and experience working with diverse clients.

5. Overemphasis on Technical Features: ERP selection consultants often focus heavily on technical features and functionalities while neglecting the importance of the organization’s unique requirements and strategic goals. This bias can result in a mismatch between the selected ERP system and the organization’s needs.

Consultants should prioritize understanding the organization’s business processes and aligning the selection criteria with the strategic objectives.

Final thoughts

Selecting the right ERP system is crucial for the success of any organization, and ERP selection consultants can provide valuable guidance throughout the process. However, it is important to recognize that both deliberate and unconscious biases can influence their recommendations.

Organizations must approach the selection process with skepticism, actively questioning and challenging the recommendations provided.

By fostering open communication, encouraging diverse perspectives, and ensuring consultants consider a broad range of options, you can mitigate biases and make informed decisions that align with your unique requirements.

The Role of Financial Planning and Analysis in a SaaS Startup

SaaS FP&A is the ticket to ensuring long-term growth and profitability for software companies.

Whether you have a dedicated FP&A team or you’re handling those responsibilities as the CFO, this post will help you:

  • Understand why optimized FP&A is fundamental to your organization’s success.
  • Pave the way to profitable planning and analysis at your firm.

Let’s begin.

Why is data all-important in FP&A?

In order to achieve optimal results from your FP&A, it’s vital to have access to as much financial data as possible. After all, acquiring financial data is the first step in analyzing it.

Organizations that rely on manual accounting technology often find themselves in a vicious cycle.

With the best of intentions, they collect what little financial data they can. Then they analyze it through the lens of present goals, run forecasts with it, and otherwise put it to use.

But FP&A is a lot like life itself: you largely get out of it what you put into it. Finance professionals who come to the table with incomplete or unhygienic data are setting themselves and their companies up for failure–or, at the very least, highly ineffective SaaS FP&A

What objectives should you have when conducting financial analysis?

The primary goals of FP&A in SaaS finance

Modern SaaS FP&A is conducted with a few core goals in mind.

We’ll go into much more detail about specific FP&A functions below. But the broader goals underlying those processes include:

  • Helping companies understand the likely financial outcomes of various plans.
  • Identifying companies’ main profit drivers for optimal resource allocation.
  • Supplying organizations with a comprehensive and updated view of their essential financial information.

How, specifically, do SaaS FP&A teams achieve all this?

Revenue & billing forecasting

Revenue forecasting is the lifeblood of profitable sales campaigns, pricing rollouts, billing adjustments, and much more.

A cardinal rule of effective financial management is that you always look (then look again) before you leap.

Cloud-native financial management software makes revenue forecasting as simple as entering your data and clicking a button.

Forecasting in the cloud enables further-reaching, more reliable forecasting for:

  • Hybrid billing experimentation
  • Pricing new products and features
  • Extrapolating usage trends into the future and much more

FP&A also plays a vital role in effective hiring for SaaS organizations.

Hiring decisions and department headcounts

Hasty hiring can be costly in terms of both time and cash. FP&A helps companies make profitable hires in a few different ways.

Preventing overhiring 

Without detailed FP&A, it can be tricky for SaaS companies to gauge the precise scope of their hiring needs in various departments.

Clearly establishing goals 

“We need more people here” is not a strategic hiring statement. FP&A establishes concrete outcomes to aim for and keeps you from making regrettable moves.

Providing team and department headcounts

Once the hiring process is underway, your FP&A team will also carry out headcounts. This helps SaaS CFOs keep an ongoing and updated sense of how their hiring results are shaping up relative to their budget and expectations.

Reporting on metrics and KPIs

FP&A is inextricably tied to your SaaS metrics. The more exhaustive your library of KPIs and metrics, the more detailed and profitable your financial analysis will be.

Manual accounting software is often unequipped with the full range of KPIs necessary to thrive in today’s competitive SaaS market.

When you equip your FP&A team with cloud-native financial management software, you’ll never have to worry about missing metrics.

Automation will help your team fully understand how all your various KPIs work together and impact each other in real time.

Budgeting optimally and minimizing variance

Budget variance is a massive impediment to SaaS profitability. What’s more, if you repeatedly miss the mark on budgeting, it won’t be long before your board takes notice.

A strong investment in FP&A can help you hit your budgeting goals by:

  • Providing real-time variance alerts: Cloud-based accounting software automatically alerts your team when you’re approaching budget milestones too quickly.
  • Enabling detailed budget forecasts: Forecasting removes the guesswork from SaaS budgeting–because when it comes to setting budgets, no one likes surprises.
  • Ensuring proper allocations: Failure to achieve proper budget allocations can cause serious capital shortfalls in your company. It’s hard to stay profitable unless you can put the right resources to work at the right place, at the right time.

Cloud-native financial management software helps CFOs and finance professionals eliminate budget variance.

Enhance your SaaS FP&A effectiveness today

In many ways, FP&A acts as the foundation of SaaS accounting success. Maximizing the FP&A function and surrounding technologies such as automation allows leaders to confidently chart their course for effective financial decision-making.

FP&A may serve as the foundation of accounting success. But when you’re building a house, you don’t stop at the foundation. That’s why we created the Modern SaaS Finance Academy, an online academy designed to help you learn vital skills that will set you apart from the competition in the coming years.

Join the academy today.

5 SaaS Metrics that Matter for SaaS Companies in Times of Uncertainty

When economic uncertainty strikes, turn to your metrics and KPIs. They offer an objective touchpoint during times when everything else is up in the air.

This post is all about why metrics matter during a market correction. We’ll explain why metrics are so essential for SaaS financial health (in all markets but particularly in poor ones), and then cover 5 of the most important KPIs to watch during a dip.

How do metrics help when certainty drops?

Since SaaS CFOs are human beings just like the rest of us, their decisions are colored by emotions.

This means that unless you’re either very careful or very disciplined, it’s incredibly easy to make impulsive and fear-based decisions in a downturn.

And since it’s easier to be unclear than to remain disciplined in scary situations, putting up “guardrails” in the form of SaaS metrics is invaluable.

That way, any time you have a thought or a plan you suspect might be influenced by fear of external conditions, you can check it against your metrics.

Optimal financial leadership during a recession means being proactive rather than reactive–and that starts with your metrics. Below are 5 of the most crucial metrics to watch in times of uncertainty.

1: CAC to CLTV ratio

Your customer acquisition cost (CAC) and customer lifetime value (CLTV) are two extremely important KPIs.

Your CAC tells you how much you’re spending on average to acquire each customer, and your CLTV tells you how much money your users are spending with you before they churn.

During an economic dip, you need to keep a very close eye on your CAC to CLTV ratio. Do everything you can to reduce your CAC and get your CLTV as high as possible.

Some techniques for doing that include:

  • Experimenting with different billing and pricing methods.
  • Carefully observing usage trends to identify what’s working and what’s not.
  • Reducing subscription upkeep costs by embracing financial process automation.

What other metrics should be on your radar in uncertain times?

2: Monthly recurring revenue

Monthly recurring revenue (MRR) is one of your most essential revenue metrics during a downturn. It measures the amount of committed monthly revenue you’re generating from existing subscriptions.

Drumming up new customers is essential too, but capital preservation and customer retention are more profitable for most companies in a recession (or pre-recession market).

Cloud-based financial software makes tracking and improving your MRR simple and seamless.

3: Churn

Churn simply cannot be tolerated when the markets are poor. SaaS accounting automation can help you proactively manage both types of churn.

Voluntary churn: Early intervention is the key to preventing voluntary churn. AI enables finance teams to carefully track and forecast churn rates to easily identify users who are likely to churn soon. Once you’ve identified them, you can send that data over to sales for customer success outreach.

Involuntary churn: Involuntary churn occurs when users need to update their payment data and their card gets declined. Once a user’s card declines, cloud-native accounting software can send out automatic emails asking that person to update their payment info.

Staying on top of both types of churn is an absolute necessity in subpar markets.

4: Trial health

Trial health measures the percentage of users who converted to a full subscription after signing up for a free trial.

It’s usually expressed as a percentage and can be found by dividing the total number of trial conversions for a given period by the total number of trial signups for that same period.

So, for instance, if you achieved 3,300 conversions across 3,500 free trials in the previous quarter, your trial health for that period would be 94%.

Free trials are a great way to create more business in times of uncertainty, but only if they’re measured and managed proactively.

5: Cash burn rate

Your cash burn rate (CBR) tells you how long your cash reserve will last given your revenue and liabilities.

It’s broken down into three pieces:

  • Gross burn rate: Your gross burn rate measures your company’s expenses. Just total up your average monthly liabilities, and you’ve got your gross burn.
  • Net burn rate: To find your net burn rate, subtract your monthly expenses from your monthly revenue.
  • Cash runway: To calculate your cash runway, divide your current bank holdings by your net burn rate. Your cash runway is usually expressed in months.

The three parts of your cash burn rate work together to provide a clear picture of your cash coming in and going out. More importantly, it offers a precise gauge of how much financial leeway you have in light of those two realities.

Making the most of your metrics

In order to develop a truly profitable relationship with your metrics during a downturn, it helps to follow a few best practices.

Make sure everyone understands why KPIs matter

If everyone in your department is fully aware of the strategic importance of KPIs, it will be much easier to keep things from slipping through the cracks.

Optimize your SaaS finance tech stack

Opting for modern accounting software gives teams much more freedom to interact with their metrics.

Embrace financial process automation 

Manual reporting and forecasting around SaaS metrics are ineffective and potentially costly.

You can’t control the state of the markets. But as a SaaS CFO, you can certainly control how your department responds to those conditions.

Thrive in any market by investing in yourself

When it comes to achieving SaaS accounting success and long-term profitability, very few things matter more than your metrics. When market conditions are poor, fear tends to creep in and become a larger influence in decision-making. Your SaaS metrics provide an objective reference point to keep that from happening, allowing you to operate confidently at all times.

To learn more about how you can lead with confidence and clarity in and out of recessions, join the Modern SaaS Finance Academy. It’s an online academy designed by SaaS finance and accounting leaders at the forefront of the industry. Each course was created to help you gain the skills and perspectives you need to guarantee success in the coming years–topics include forecasting for fundraising, frameworks for reporting to your board, innovative AR designs, and much more.

Join today and level up your SaaS finance career.

The secret to automation – go slow to go fast

Recently, I sat in on a financial-services session at our annual Sage Transform conference for Sage Intacct customers and partners. The session focused on family offices, and one of the panelists, a CFO at a firm with dozens of multiple entities,  described her journey building the firm’s financial tech stack. She spoke of taking months to analyze their business processes so their automation efforts would get it right the first time. Her elegant summary was, “we went slow to go fast.” Brilliant.

During my flights back and forth to the conference, I read a great Winston Churchill biography, in which he was quoted to have said (and I paraphrase a bit) “…the longer one looks back, the further ahead one can see.”

Look back to look forward. Go slow to go fast. Great ideas when it comes to automation. With technologies such as robotic process automation, machine learning, and artificial intelligence, it’s tempting to jump in with abandon. Here’s another phrase that I’ve long adhered to: “A bad process that’s automated is now an automated bad process.”

My point is that going slow, taking your time, and doing it right is essential. Looking back to analyze what’s worked and finding ways to streamline processes will reap great rewards. A systematic review and a deliberate phased-in approach are more advantageous than “ready-fire-aim.”

There are some great places to start automation, including accounts payable, billing, payroll and tax compliance. Let’s look at each to find ways to go slow to go fast.

Accounts Payable Automation

One of the first processes accounting departments look to automate is accounts payable. Typically, the AP process includes receipt of the purchase order from the purchasing department, receipt of the invoice from the vendor, comparing the PO to the invoice to match and validate accuracy, and then paying the vendor. Some organizations use a two-way match while others use a three-way match to check the goods receipt.

While the process itself might be easy, it’s time-consuming lacking automation. (It might be easy, but no one has said it’s simple.) Depending on what you purchase (think goods or services), your AP process is most likely well-defined, but likely not without challenges that may include:

  • Matching errors
  • Exception management
  • Missing documents
  • Double payments
  • Delayed payments
  • Unnecessary or unauthorized purchases
  • Theft and fraud

Automating AP offers the opportunity to significantly cut costs. Most studies put the cost to manually process an invoice at around $20, when factoring in time spent, error reconciliation, approvals and fully loaded labor costs. By automating AP, the cost per invoice drops by 90%.  For example, if you’re processing 2,000 invoices a month, the potential cost savings is $36,000 per month.

So how do you go slow to go fast? One area to review is the approval process. Depending on the amount of the invoice, you may have two or more levels of approval. Take a look at these levels and the number of invoices in each and see if there’s an opportunity to adjust the levels without adding risk. Also, look at who is approving invoices as the manager approving the invoice should be a different person than the individual approving payments.  If you don’t have it today, document your approvals matrix to define who the approvers are, their timelines to approve and who the secondary approvers are in their absences. This will make it easier to set up the right rules when automating routing, so you can create “if-then” rules. Of course, exceptions will happen, but AP automation can dramatically reduce the outliers and speed up the payments process.

Billing Automation

An automated billing system invoices customers without significant manual intervention. The system is ideal for businesses that charge customers a recurring amount every month through a subscription or retainer model. With automated pricing models and billing templates that match your business, you can “set it and forget it.” You get bills out faster, decrease days sales outstanding, and free up cash to grow your business. By driving your billing, revenue, and financials from a single source—the contract—you can manage a single revenue stream and automatically recognize revenue throughout the customer lifecycle. Contract changes, including renewals, upsells, downgrades and holds, drive automatic updates to revenue recognition, billing and your financials so that they are aligned. You save time, eliminate errors and reduce confusion.

For example, real-time bidirectional synchronization between Salesforce and your financials allows you to maintain templates and schedules in your financial solution while maintaining customers, contracts, changes and renewals in Salesforce. Billing and payments are easily visible to salespeople all in one place. Everyone stays up to date with your customers’ financial relationship to provide a more consistent customer experience.

Software-as-a-service is a great candidate for billing automation. Professional services and medical offices can also benefit from implementing an automated billing system, even if they don’t charge a uniform amount to clients and patients. Automated billing systems operate by invoicing customers and accepting payment or automatically charging customers with an on-file payment method.

Billing is another opportunity to go slow to go fast. There are some obvious business models where billing automation plays well, but your business might have less-than-easily apparent places where automation makes a lot of sense. For example, my local car wash offers a subscription package for unlimited car washes in addition to one-time charges. Using an automated billing system, they wouldn’t have to worry about manually processing the recurring charge.

Look at your invoices to find recurring charges to customers and clients, then automate these to cut costs.  More importantly, this can improve your cash flow.

Payroll Automation

Automating payroll all but eliminates the most labor-intensive aspects of the payroll process. Specific features vary from one provider to the next, but employers should be able to:

  • Calculate wages earned
  • Integrate payroll with time and attendance
  • Withhold taxes and other deductions
  • Pay employees
  • Run payroll reports
  • Access important tax forms

For example, payroll managers can automatically synchronize new employee records, managerial hierarchies and changes to employee information or status. As well, hierarchies synchronize across solutions and approval workflows, expenses, timesheets, journal entries and purchasing. These are automatically set up or updated once an employee is created or changes jobs. This allows you to generate payroll journal entries that accurately map to your general ledger. As well, it eliminates the need to manually key-in payroll journal entries or build and maintain complex integrations to accurately map payroll journal entries to your general ledger. With just a few clicks, you can automatically prepare and push payroll journal entries, including dimensions, so they fit into your existing chart of accounts and increase the ease of reporting.

One way to go slow to go fast is to ensure every employee, regardless of role, is correctly mapped and associated with cost centers, so as that employee moves within or exits the organization, payroll expenses are properly allocated. In some cases, it might mean creating new cost centers. Changes in employee roles might also lead to splitting allocations, so it makes sense to predefine these splits by role.

Another word on payroll. You might be using a popular payroll service today. If so, your “go slow” step might be looking at whether that service can integrate with a general ledger platform.

Tax Compliance

The process of manually managing the collection, calculation, and filing of taxes is problematic at best and a nightmare as companies scale and grow. Your company might be selling more goods and services in more places and ways than ever before. On top of that, tax rates are constantly changing. In the United States alone, there are hundreds of changes each year.

Chances are you’re already using some type of automation to help with tax compliance as the risks associated with noncompliance are great.   With that said, in a recent report IDC listed some questions you should be asking of your current vendor or any vendor touting tax compliance. Some of these questions include:

  • Does the vendor have experience with my type of product, service and company size?
  • Is the vendor knowledgeable about financial regulations and guidelines both locally and globally as they affect my company?
  • Does the vendor understand the regulations that will impact my business? How are these regulations reflected in my current product and how will it change in the future?
  • Can the vendor integrate with my company’s other IT systems and those of my partners?
  • Will the vendor be a partner, helping my business grow now and in the long term?

Good questions to ask and not just of a tax-compliance vendor. These could apply to any vendor in your financial tech stack.

Why Automate? 

If the complexities of accounts payable, billing, payroll, tax compliance and other financial processes aren’t enough to convince you to automate, let me share some reasons why you should look to automation to go fast.

  • Automation cuts cost. Manual tasks, including account reconciliation and variance analysis, can turn into deep pits and you can avoid these with automation. Often, we talk about automation as a time saver, but I believe the cost reductions that result are more significant. Sure, we all want a faster close or continuous close, but taking cost out of these processes moves money to the bottom line.
  • Automation reduces the chances for human error.  And if you go slow to go fast, you can greatly reduce the opportunities for any errors, human or otherwise. There will always be some percentage of outliers, but that percentage goes way down when you deploy smart, intelligent, purpose-built automation.
  • Automation reduces the opportunity for fraud. Let’s face it, fraud happens. It might not be your number-one concern as you trust your colleagues, but it happens, nevertheless. And though you’ve vetted your vendors, there are humans at the other end of that invoice. Automation with outlier detection greatly reduces your risks.
  • Automation ensures consistency. As you go slow to go fast, you’re going to discover that everyone has a slightly different way of doing things. Two persons might have different ways of approaching something as cut-and-dry as double-entry bookkeeping. Automating processes creates greater consistency within teams, reducing the chances of mistakes and information gaps.
  • Automation gives you faster access to the information you need to make data-driven decisions. This is the biggest benefit of all and enables you to be more strategic.  You can get fast access to real-time key performance indicators to drive your business forward.

I’ve outlined just four processes where you can go slow to go fast. Others include expense management, commission tracking, bank reconciliation, contract management, revenue recognition and many more, but remember – a bad process automated is an automated bad process. Take your time and enjoy the rewards of getting it right from the start.

P.S.  If you’re interested in the Churchill biography, let me know and I’ll pass along the title and author.