One of the most prevalent, dangerous, and hard to break habits that exists at an organization is its peoples’ obsession with using Excel for everything. Even if the software has become smarter in the past years and has become more useful when paired with Microsoft Power BI, the continued use at your organization is creating more problems than it solves, and it’s important to break this bad habit before it’s too late. Read more
Fast-growing firms in highly regulated field don’t have time for mistakes. Not only is a delay or error going to slow your growth, but it could also expose you to major risks from regulators. For a company like this medical service organization, who has gained traction by being a leader in serving Medicare Advantage clients, they needed to not only handle the complex needs of insurers like Humana, but of the Centers for Medicare & Medicaid Services (CMS) as well.
However, the company was using QuickBooks to maintain their accounting books for 10 entities. This held the company back, reduced visibility, and created risks that the company couldn’t afford. This is why they turned to rinehimerbaker: They needed a modern cloud accounting solution that could handle the needs as they grew and integrated with other leading solutions available for companies in the medical community.
To address this, rinehimerbaker migrated them from QuickBooks to Intacct with an integration with AvidXchange and ADP, which provided real-time visibility (cross-entity) into company status, accounts payable work flow and payment automation and an ADP direct payroll integration into the general ledger.
“As a CFO, for a growing, acquisitive company, I wear many hats. Each day is an adventure. We need to act fast and make decisions based on accurate data. When we spend time waiting and watching for data we lose on opportunities.
Our immediate benefits were: a time savings of 20 plus hours per month in report preparation and accounts payable process efficiency, we were able to deliver real-time status to our CEO to facilitate strategy decisions, automated integration with AvidXchange eliminating risk/mistakes while improving controls, integrated payroll saving time on inputs, most of all our accounting employees were happier, as they enjoyed using the system.”
Learn more about this company’s journey from spreadsheets to the cloud here, learn more about the dangers of spreadsheets and the people who blindly support them in our latest blog on Outgrowing QuickBooks, and learn more about how your medical practice can leverage the cloud for growth below.
From architectural and accounting firms to digital marketing agencies and IT consultancies, more professional services companies are managing their financials in the cloud. You may have started with spreadsheets, but automating financial management and accounting tasks—especially if you run a project-based business—creates time and cost savings that transform business operations and customer experiences. Read more
Some big news from the team at rinehimerbaker. Earlier this month, we were named the Sage Intacct Partner of the Quarter for our strong sales performance and high levels of ongoing customer satisfaction. Learn what this means for our prospects and customers below. Read more
The benefits of cloud-based software are usually cited as lower costs, process and workflow optimization, and scalability. But the attraction and retention of key finance and accounting department personnel is another benefit of implementing the best-in-class technology—one that’s not included in the “top 5 benefits” lists, but should be. The reality is that today’s top financial talent—and tomorrow’s leaders—operate in a digital world, where 24/7 access, insight, and productivity reign. Read more
“Half a league, half a league, Half a league onward, All in the valley of Death Rode the six hundred.” These words open one of the most famous poems in British History, written by Alfred Tennyson, which commemorated the loyalty, valor, and fortitude of the Light Brigade as they fought Russian forces in the Battle of Balaclava on 25 October 1854.
Greatly outgunned, the men of the Light Brigade valiantly charged against Russian Artillery Forces, charging with as many as 600 men as they approached a well-fortified artillery unit.
Knowing this, the Charge of the Light Brigade is less a story of heroism, and more a story of incompetence. Poor communication resulted in losses of nearly 20% of the brigade, and war reporter William Russell documented the destruction, quoted, “our Light Brigade was annihilated by their own rashness, and by the brutality of a ferocious enemy.”
Now that you’ve gotten your history lesson for the day, you may be wondering what this has to do with finance, accounting, or a personal spreadsheet software invented some 131 years after the battle. The answer? These two things have more in common than you’d think.
There are many parallels between your Excel loyalists in the finance and accounting departments and the destined-to-fail charge that occurred on 25 October 1854. We’d like to explore a few of them below.
The Light Brigade was a fast-moving reconnaissance and flanking unit, poorly suited for a frontal assault. While they were perfect for capturing Russian units attempting to carry away guns, the heavy brigade was better for attacking the fortifications (redoubts) held by the Russians.
Just as the light brigade was sent to do the heavy brigade’s job, many organizations are using Excel to accomplish tasks that Excel is not designed to handle—planning, analysis, closing the books, and more; where there’s a will, there’s a formula. This is a dangerous way of thinking akin to thinking that the light brigade would have been fine if it just had armor.
We’ve gone on the record saying that Excel has value for some purposes—like a personal budget or other simple tasks. However, there are many medium and large companies that attempt to stretch the software beyond its usefulness—often with dire results.
Of course, The Charge of the Light Brigade documents another thing—loyalty. Valiantly, they rode “into the jaws of death, the mouth of hell,” facing surefire death.
If we could use one word to describe Excel loyalists, it would be loyal. As we discussed in our last blog on the software, “There’s a Red Badge of Courage that people wear when they stay up all night and work a spreadsheet to get something that they think is unique and artisanal.”
However, Loyalty as it pertains to Excel is by choice, while the Light Brigade was loyally following orders as they fought for the crown. There are many other, much more capable, less risky tools available to company. In fact, some Excel Loyalists are so stubborn that they will eschew a multi-million dollar implementation to use their software of choice.
The Charge of the Light Brigade likely was the result of a misinterpreted order by one of the officers. People make mistakes. Some are costlier than others. The Charge of the Light Brigade stemmed from an unclear order and a sweeping motion of the arm, when Lord Raglan sent the following message:
“10:45. Lord Raglan wishes the cavalry to advance rapidly to the front — follow the enemy and try to prevent the enemy carrying away the guns — Troop Horse Artillery may accompany – French cavalry is on your left. R Airey. Immediate”
Unfortunately, it was delivered as “Tell Lord Lucan the cavalry is to attack immediately.”
Excel users make mistakes. Writers make mistakes, financial professionals make mistakes, and commanders make mistakes. We all make mistakes.
The difference of course, is this: If we write a typo on a blog, it doesn’t affect the other blogs, it won’t crash our website, and it will do little more than annoy a few of the sticklers among us.
In Excel, a misplaced decimal, an extra zero, or an improperly selected cell in a formula may not be caught for months, quarters, or years. As time passes, this one missed number creates a chain reaction, as concurrent spreadsheets are built upon this mistake, and the mistake becomes your truth.
With at least one error on nearly 90 percent of spreadsheets, the only time this might work is the rare possibility that two errors counteract each other.
There are many risks in pushing Excel beyond its limitations, and it appears that the business community is starting to realize this. With scathing articles on the failures of Excel being featured in Forbes and the Wall Street Journal in recent months, the future of the spreadsheet cavalry is in doubt.
Knowing this, as you push to shun spreadsheets from your financial processes and fight to increase accuracy and security by eradicating Excel, it’s vital to look at opportunities to sway Excel loyalists from the software—which is easier said than done.
As you push through 2018, you need to slowly convince the spreadsheet jockeys that Excel is not the right tool for the job by demonstrating to them just how user-friendly and intuitive an alternative can be (which seems less heartless than the alternative pitched by Forbes contributor Meta S. Brown).
The great war against spreadsheets will be long and arduous, and needs to be done subtly—because no one likes having a decision forced upon them. One of the best ways to convince the loyalists is to demonstrate how much time and effort they can save by giving them a chance to test drive a platform like Sage Intacct that can show them how much easier life could be.
Looking at the rest of 2018, we will be writing many more blogs on the pitfalls of using Excel for finance—as well as its partner in crime QuickBooks—so be sure to subscribe to our email list for all the latest.
The construction industry continues to see a winning streak. Just days after the passage of tax reform, a new report from the United States Census Bureau found that the construction industry continues to beat estimates—nearly 1 percent above October estimates and nearly 2.5 percent above predictions made one year ago.
From the Census Bureau January 3 Release:
“Construction spending during November 2017 was estimated at a seasonally adjusted annual rate of $1,257.0 billion, 0.8 percent above the revised October estimate of $1,247.1 billion. The November figure is 2.4 percent above the November 2016 estimate of $1,227.0 billion.”
Driven by major gains in private construction (seasonally adjusted annual rate of $964.3 billion, 1.0 percent (± 1.0 percent)* above the revised October estimate of $955.1 billion), this continues a winning streak for the construction industry, which has beaten estimates for [x] months and whose executives can look forward to sunnier futures now that they can put more money back in their business.
Looking back over 2017 (December spending reports to be released in February), the outlook has been positive for private construction spending, and the industry has beaten it. Below, you can see the seasonally adjusted annual rates compared to estimates of the same month in 2016 and 2015.
*Please Note: We used revised numbers and final estimates where possible to calculate the percent change. This results in different percentage change numbers than those in the press release. For example, in the October spending PR from the Census Bureau, private construction spending was estimated at $949.9B, and revised to $955.1B in the November release.
| Month | Spending (in Billions) | Prior Year (in Billions) | % Change | 2015 | % Change from 2015 |
| December | TBA | $909.7 | N/A | $ 844.1 | |
| November (Projected) | $ 964.3 | $939.5 | 2.40% | $ 853.7 | 12.96% |
| October (Revised) | $ 955.1 | $ 920.1 | 3.20% | $ 845.7 | 12.94% |
| September (Revised) | $ 954.2 | $ 914.3 | 4.36% | $ 858.9 | 11.10% |
| August | $ 945.8 | $ 911.5 | 3.76% | $ 848.6 | 11.45% |
| July | $ 947.5 | $ 907.9 | 4.36% | $ 838.3 | 13.03% |
| June | $ 955.7 | $ 893.6 | 6.95% | $ 829.9 | 15.16% |
| May | $ 954.5 | $ 888.3 | 7.45% | $ 820.7 | 16.30% |
| April | $ 942.6 | $ 854.6 | 10.30% | $ 797.5 | 18.19% |
| March | $ 950.8 | $ 879.0 | 8.17% | $ 776.3 | 22.48% |
| February | $ 949.3 | $ 858.1 | 10.63% | $ 764.9 | 24.11% |
| January | $ 946.3 | $ 858.1 | 10.28% | $ 759.4 | 24.61% |
With much of the economic uncertainty out of the picture, and promises of tax reform lurking since the November 2016 election, it’s no surprise that there were multiple months in which spending saw 10%+ growth year-over-year, and nearly 25% growth over the past two years. Following the passage of the tax reform bill, it’s even more likely that you can expect more construction spending on the horizon.
Even more, with the idea of an infrastructure bill being floated around, there could even be larger increases in nonresidential construction spending as the years progress.
Residential spending continues to recover post-recession, seeing just under 10% year-over-year growth. Among the biggest growers in 2017, transportation, commercial building, and healthcare have all seen large year-over-year increases, and single-family units have kept residential construction on the rise. For more information, including year to date value, please read the entire press release.
As construction spending continues to increase, businesses can expect growth is on the horizon. This said, the current lull in business is the time you should start looking at options for the busy season. If you feel like you’re pushing your current accounting solution to its limits, now is the time to look at your next step. Sage Intacct is one of those options. Designed to meet or exceed the needs of growing businesses in the services industries, construction companies now have an option designed in the cloud, backed by one of the leaders in the construction industry. We’d like to invite you to learn more about Sage Intacct for construction companies here, and contact us for more information.
What happens in the back office of your restaurant isn’t ever a customer concern—unless, of course, their meal is missing a key ingredient or the credit card system goes down. Your customers are focused on their dining experience, and they probably don’t think beyond what happens in the kitchen; the only thing on their minds is the roulade, the house white, and the soup of the day.
Little do your customers know that on the other side of the kitchen wall resides the business management office, which offers up a different kind of hustle and bustle: inventory control, payroll processing, quarterly reporting and more. Let’s take a look at the pain points encountered within—because they signal the need for transformation.
Restaurants that are still using manual accounting systems based on paper ledgers and spreadsheets find it hard to keep up with the fast-paced financial world around them, even if their processes include the use of boxed accounting software. This antiquated approach relies on yesterday’s latest-and-greatest—which pales in comparison to today’s automated, digital, accessible-24/7 solutions.
The challenge this presents for restaurant owners is that when compared with competitors who do leverage today’s technology, they’re not able to make the best use of their data and resources:
These roadblocks can be substantial for restaurant owners who have expansion plans. Most entry-level accounting software simply isn’t equipped to support increasing needs for inter-company transactions, real-time line item reporting across restaurants, or multi-user access. And without comprehensive insights into business drivers, owners don’t have adequate decision-support and can quickly lose competitive ground.
We hate to suggest that customers are ever a pain point for a company, so let’s reframe this by saying that today’s digitally minded consumers are influencing change in the way restaurants approach their IT investments. Hospitality Technology’s 2017 Restaurant Technology Study found that for the first time in a decade, digital engagement displaced efficiency as the top strategic goal for IT investments. Indeed, improving digital customer engagement/loyalty is the top strategic goal cited by 61% of respondents. But that’s followed by improving business and customer analytics (39%), enhancing payment and data security (38%), and increasing employee productivity (27%).
With so much focus on the customer experience, restaurants are on the hook to deliver more than a delicious meal to the table (or front door). Efficiency still matters. That’s why restaurant IT environments that cater to both the customer and the office administrator are positioned to perform well into the future. It’s the best-in-class cloud-based solutions they can count on to support them at every angle.
Sage Intacct’s hospitality accounting software helps restaurateurs manage their financials for single or multiple locations. Thanks to automation technology, it’s easier than ever to keep up with evolving revenue recognition requirements, manage vendor payments, get real-time visibility into cash flow, and analyze operational and financial performance across a number of dimensions. Since the solution is cloud-based, it’s easily integrated with your existing systems—or those you’re planning to implement. As such, it’s scalable and can grow with you, whether that means expanding into new locations or introducing next-generation technology to delight employees and customers.
Get in contact with us to learn more.
The first major legislative victory on behalf of President Trump, and the first major accomplishment since the appointment of Supreme Court Justice Gorsuch, and the largest tax reform package in over 30 years, the Tax Cuts and Jobs Act was finalized by Legislators on December 20, 2017 and was signed into law just days later.
While the bill will save money for nearly everyone (outside of high-income earners in high income tax states—due to the removal of the SALT deductions), the bill will create opportunities for a great deal of Americans and American employers. Today, we would like to discuss some of the important caveats and cutouts that affect the construction industry.
The construction industry is one of the many beneficiaries of the tax bill, set to reduce corporate tax rates, increase pass-through deductions, and make the United States more competitive in the global economy. Below, we would like to address some of the biggest benefits (and a few of the challenges) that will result from the new tax code.
One of the most prominent changes in the new tax code is the massive reduction in the corporate tax rate from 35% (the highest in the industrialized world) to a more competitive 21%. Construction companies, many of whom face cash flow challenges day in and day out, stand to benefit from keeping more of their own money.
Under current law, the Corporate Alternative Minimum Tax is 20%, with an exemption up to $40,000, and corporations averaging less than $7.5 million in gross receipts over the past 3 years were exempt. Under the new law, the corporate alternative minimum tax is repealed.
The repeal of the AMT is hugely important for all corporations, especially those in the construction industry, as it removes a complex yet necessary process from the bookkeeping process. Under current law, the AMT required companies to essentially keep two sets of books making it both costly and paperwork-heavy. The new tax code will make life easier for accountants, bookkeepers, and business leaders at construction firms.
If there is one thing that will be advantageous for construction firms looking to purchase business equipment over the next five years, it will be the expansion of Section 179 equipment expensing—now doubled from $500,000 to $1 Million. There are two ways to look at this.
First, by doubling the amount that can be expensed, it will encourage investment in machinery and other equipment at construction firms. It will also reduce the hassles of depreciating an item over five, six, ten years, or eighteen years. However, there is huge value in expensing everything you can in 2017. With the corporate tax rates dropping in 2018, you will benefit from reducing your taxable income as much as possibly this year. We recommend expensing anything you can in 2017 to maximize your benefit.
Many construction companies exist as pass-through entities, and the new bill will allow them to keep more money. Now, sole proprietorships, partnerships, LLCs and S-corporations in architecture, engineering, and construction have been recognized for their role in building America, and will receive their reward for this role.
In the early versions of the bill, architects, engineers, doctors, lawyers, financial services firms and numerous other types of businesses were grouped together and excluded from the deduction. However, a redraft made a compromise for engineers and architects (including construction firms), recognizing their “integral role in facilitating capital investment” and ultimately qualifying them for the pass-through benefit.
Starting in 2018, Pass through entities (S-Corps / Partnerships) except for service entities will receive a 20% deduction on qualified income, subject to the greater of 50% of W-2 wages paid or 25% of W-2 wages paid and 2.5% of property placed in service.
For some construction firms, the tax bill may not be 100% sunny. Raymond Torto, head of Raymond Torto Commercial Real Estate Advisory Services, believes that a tax cut during full employment could be too much of a good thing, ultimately leading to capacity strain and inflation. “Commercial real estate will suffer higher interest rates with steady demand—a good outlook if debt is not excessive for the asset class.”
Additionally, the new tax bill could pose challenges for realtors—and in turn, those in residential (single- and multi-family) construction. By doubling the standard deduction and reducing the mortgage interest rate deduction, the legislation blunts the benefit of the mortgage interest deduction—one of the key factors in the home-buying decision.
In 2017, Construction is one of the most heavily-taxed industries in the United States—second only to the retail industry in effective tax rates at 28.7%, and stands to benefit from this bill. While the new tax plan hasn’t made strides to cut spending and tackle the long term sustainability of the United States fiscal future, this has been a much-needed break for companies across the United States. As you forge ahead into the coming years, we would love to help.
In 2017, rinehimerbaker launched its construction-focused accounting technology practice, designed to help construction companies simplify their accounting, save time and money, and grow their business.
By working with one of the most trusted names in construction accounting software—Sage—we are proudly helping construction firms to find their way into the cloud with Sage Intacct—a best-in-class cloud ERP designed to help you increase project profitability and visibility. Contact us to learn more.
The winds of accounting standards are changing, and public companies now have a new requirement in place for the way they recognize revenue from contracts. The next reports they file will need to account for the new standards in their next financial reports.
For private companies, the year may be one year later. But many organizations have found this to be more challenging than the average accounting standard change—because ASC 606 affects nearly every department, every process, and every contract you have. This is why it’s so important to get started now—companies who have already made the shift have found many unforeseen challenges in making the transition, most notably driven by internal revenue considerations, new disclosure requirements, concept and impact of revenue allocation, timing of the adoption, and issues pertaining to recognizing revenue in advance of billing. Read more
