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Questions to Ask Cloud Accounting Vendor

6 Questions to Ask to Narrow Down Cloud Accounting Vendors

If you’re outgrowing QuickBooks or simply looking to simplify and automate your processes by moving accounting to the cloud, the process for building a long list and then narrowing it down to a short list can be a challenge. As part of the narrowing-down process, you will spend a lot of time demoing the software and discussing it with the sales team for each vendor.

As you narrow down your options, it’s important to understand what you’re looking for and how the solution will fit into the equation. This is why we have developed a non-exhaustive list of important questions to ask—and what you should expect in terms of an answer.

Question 1: How Much Uptime Can You Promise?

The uptime discussion is one of the main things that can separate vendors, and should be one of the first things you look for. Uptime is generally discussed in terms of “nines,” as in “how many nines can you promise,” and shouldn’t be taken lightly, as each nine promised is a testament to the company’s commitment to the customer:

  • Two Nines (99%): 3.65 days per year, 7.2 hours per month, 1.68 hours per week
  • Three Nines (99.9%): 8.76 hours per year, 43.8 minutes per month, 10.1 minutes per week
  • Four Nines (99.99%): 52.56 minutes per year, 4.32 minutes per month, 1.01 minutes per week
  • Five Nines (99.999%): 5.26 minutes per year, 25.9 seconds per month, 6.05 seconds per week

While five or more nines is often reserved (and priced) for mission critical applications like telecommunications, utilities, and more, your cloud provider should be able to promise and deliver more than two nines. Often, the sweet spot for SaaS applications is right around three nines, meaning you will see no more than ten minutes of unplanned downtime per month.

However, the real way to judge a vendor is not by promises made, but promises kept. For instance, a leading vendor in the cloud space promises 99.8% uptime, but delivers a 12-month rolling average of 99.987%—nearing the five nines “promised land.”

Question 2: Have You Worked in Our Industry Before?

While the answer is probably yes (the cloud accounting and ERP market is relatively mature), the real question you should be asking is “have you had success with our industry?” It’s common for a vendor to have product or service pages for many different industries, but few case studies pertaining to the industries. It’s important to look at these case studies and success stories for companies like yours in size, needs, and industry.

Question 3: How Much Will It Cost to Get Up and Running?

Another of the natural advantages of a cloud-based accounting software, there are still differences in start-up pricing and implementation. This is an example in which time is quite literally money, as you will be charged for each hour of migration, training, and other necessary services.

The biggest differentiator in this equation is the scope of the implementation—how deep will the software reach into your organization? Suites will naturally take longer to implement, but it will be a one-time project. Single-focus best-of-breed applications can be done quickly and easily, but you may have to complete multiple, less disruptive projects. We discuss the Implementation process in our blog series, Eight Things to Look for in Accounting Software, Part 2.

Question 4: How Will Ongoing Pricing Work?

Pricing is one of the key advantages of SaaS-based applications, generally allowing a move away from licenses, which in turn helps to offer more transparency and ease decision-making. With this in mind, as you compare vendors, one of the most common structures you will see is the per-user, per-module pricing.

In this, it’s important to know what you’re getting, how much it will cost, and how much it will cost for additional users—some users will need additional access, functionality, and modules. Know what you’re getting, how much you’ll be paying, and how much it will cost to add users, modules, or more as your business expands.

Question 5: Is There a Process for Requesting New Features?

At some point, you’ll be using a software, and think, “wow, wouldn’t it be nice if I can do [this]” or “how much easier would my job be if the software could do [this]?” One of the advantages of the cloud is that updates are much more flexible and frequent. Rather than having to wait a year for new patches, cloud accounting applications offer much more frequent updates—up to four times a year.

Knowing this, it’s important to understand the process for requesting new features. Is it easy to ask? Will you be given the same opportunity to request as a large business? How does the vendor narrow down what will be added in the release?

Question 6: How Often Will These Updates Come Through?

As we said, cloud software updates more frequently and easily than an on-premises offering (updates are hands-off; often you walk in to an update the next day or on a Monday). However, the more moving parts that a software has, the less frequent or focused an update will be. This is a main difference between suites and best of breed offerings—suites add a lot of complexity to the equation, so R&D money is spread across multiple products.

Conclusion

When you look to change accounting software, it’s just as important to plan as it is to find the right software. If you know what you want, you will be able to narrow down vendors with minimal stress. Stay tuned for an upcoming blog in which we discuss some of the internal discussions you will need to have before you even start looking at new cloud solutions, coming early next month. If you’re ready to learn more about the power of Sage Intacct for your growing business, contact us today.

Step 4 ASC 606

ASC 606 Step-by-Step Step 4: Allocate Transaction Price

With just over a year to go for private companies to have their ASC 606 plans in place, many organizations are yet to have done much to get the ball rolling. This is why we began this series, to introduce you to the various steps involved in recognizing revenue under the new standard.

Background

As part of an ongoing series, we are breaking down the 156-page standard and providing key takeaways, including who ASC 606 affects, a brief overview on the five steps, and a look at how ASC 606 will affect different industries, but today we would like to introduce a deeper look at each step:

  1. Identify Contract(s) with a Customer
  2. Identify Performance Obligations in the Contract
  3. Determine the Transaction Price
  4. Allocate the Transaction Price to the Performance Obligations in a Contract (August)
  5. Recognize the Revenue When (or as) the Entity Satisfies a Performance Obligation (September)

ASC 606 Deep Dive Step 4: Allocating Transaction Price to the Performance Obligations

Biggest Impacts: Software, Telecommunications

With considerations including standalone selling price, allocating discounts and variable consideration, and changes in the transaction price, there are certain pitfalls in allocating price to each obligation.

Determine/Estimate Standalone Selling Prices

After Step 3, determining the transaction price as a whole, you will need to determine the standalone selling price of each good and/or service promised in step 4. As is often the case, the way to do this is to determine the price based on standalone sales of the good or service to similarly situated customers.

However, this is not often observable. When this is the case, a seller is to determine standalone prices in one of three ways:

  • Adjusted Market Assessment Approach: Evaluate the market in which goods or services are sold and estimate the price that customers are willing to pay.
  • Expected Cost Plus Margin Approach: Forecast the expected costs of satisfying a performance obligation and add an appropriate margin for that good or service.
  • Residual Approach (rare): Subtract the sum of observable stand-alone selling prices of other goods or services promised from the transaction price. This is only usable if the following two criteria are met:
    • The entity sells the same good or service to different customers (at or near the same time) for a broad range of amounts (that is, the selling price is highly variable because a representative standalone selling price is not discernible from past transactions or other observable evidence).
    • The entity has not yet established a price for that good or service, and the good or service has not previously been sold on a standalone basis (that is, the selling price is uncertain).

Oddly, for US-based businesses, the new standard will provide more flexibility for organizations than the previous standard, a rare occurrence within ASC 606 according to the KPMG Revenue Issues in Depth Article. Under the current standard, standalone selling prices are often established by determining vendor-specific objective evidence (VSOE).

Developing a Standalone Price Determining Framework

Notably, determining standalone prices will require a fair amount of judgement from the selling entity, as many organizations do not have robust processes in place for determining prices. To reasonably establish controls, KPMG recommends organizations follow this five-step process.

  1. Gather all reasonably available data points (cost to manufacture, profit margins, third-party pricing, etc.)
  2. Consider adjustments based on market conditions (demand, competition, awareness) and entity-specific factors (market share, pricing, bundled pricing)
  3. Consider organizing selling prices into meaningful groups.
  4. Weigh available information and make the best estimate.
  5. Establish ongoing processes for monitoring and evaluating prices.

Allocating a Discount

A discount should be allocated entirely to one or more, but not all, performance obligations in the contract if all of the following criteria are met:

  • The entity regularly sells each distinct good or service (or each bundle of distinct goods or services) in the contract on a standalone basis.
  • The entity also regularly sells on a standalone basis a bundle (or bundles) of some of those distinct goods or services at a discount to the standalone selling prices of the goods or services in each bundle.
  • The discount attributable to each bundle of goods or services described in (b) is substantially the same as the discount in the contract, and an analysis of the goods or services in each bundle provides observable evidence of the performance obligation (or performance obligations) to which the entire discount in the contract belongs.

If a discount is allocated entirely to one or more performance obligations in the contract, an entity should allocate the discount before using the residual approach to estimate the standalone selling price of a good or service.

KPMG brings up a few observations, most notably that entities should take a different approach when a large amount of goods and services are bundled in various ways, and to establish a policy for determining what ‘regularly sells’ together.

Allocating Variable Consideration

Variable consideration that is promised in a contract may be attributable to the entire contract or to a specific part of the contract, such as either of the following:

  • One or more, but not all, performance obligations in the contract (for example, a bonus may be contingent on an entity transferring a promised good or service within a specified period of time)
  • One or more, but not all, distinct goods or services promised in a series of distinct goods or services that forms part of a single performance obligation (in accordance with FASB ASC 606-10-25-14(b)) (for example, the consideration promised for the second year of a two-year cleaning service contract will increase on the basis of movements in a specified inflation index)

While discussed after the application of discounts in the standard, variable consideration allocation needs to be completed before allocating a discount. For more information, see our discussion on the differences between variable consideration and discounting in our analysis of step 2.

Changes in Transaction Price

Prices change, and for that, there are certain paths to follow and pitfalls to watch. If and when this does happen, an entity should allocate to the performance obligations in the contract any subsequent changes in the transaction price on the same basis as at contract inception.

Consequently, the transaction price should not be reallocated to reflect changes in standalone selling prices after contract inception. Amounts allocated to a satisfied performance obligation should be recognized as revenue, or as a reduction of revenue, in the period in which the transaction price changes.

Allocating Price Changes to Performance Obligations

A change in the transaction price should be allocated entirely to one or more, but not all, performance obligations or distinct goods or services promised in a series that forms part of a single performance obligation, but only if both of the following criteria are met:

  • The terms of the change in transaction price relate specifically to the entity’s efforts to satisfy the performance obligation or transfer the distinct good or service (or to a specific outcome from satisfying the performance obligation or transferring the distinct good or service).
  • Allocating the change in transaction price entirely to the performance obligation or the distinct good or service is consistent with the overall objective for allocating the transaction price to performance obligations, when considering all of the performance obligations and payment terms in the contract.

A change in the transaction price that arises as a result of a contract modification should be accounted for in accordance with the guidance on contract modifications. However, for a change in the transaction price that occurs after a contract modification, an entity should apply the guidance in whichever of the following ways is applicable:

  • Allocate the change in the transaction price to the performance obligations identified in the contract before the modification if, and to the extent that, the change in the transaction price is attributable to an amount of variable consideration promised before the modification and the modification is accounted for as if it were a termination of the existing contract and the creation of a new contract (in accordance with FASB ASC 606-10-25-13(a)).
  • In all other cases in which the modification was not accounted for as a separate contract (in accordance with FASB ASC 606-10-25-12), allocate the change in the transaction price to the performance obligations in the modified contract (that is, the performance obligations that were unsatisfied or partially unsatisfied immediately after the modification).

Conclusion: Time to Get Moving

16 months may seem like a long time (it’s only five if you’re a public entity), but many organizations are seeing challenges in making the move to implement new processes and systems to meet the requirements of the new standard.

Even if we’re posting monthly blogs leading up to the effective date, you should already be looking at transition methods and other industry-specific considerations that you need to make. To address this, we’ve compiled a list of resources for companies looking to prepare for the upcoming standard:

On Demand Webcasts: ASC 606/IFRS 15

Sage Intacct recently presented a three-part series on the new standards, which you can view on-demand.

We welcome you to peer through the full text, the AICPA guidance, and to get in contact with us to learn more about preparing for ASC 606 with outsourced accounting services and/or a new accounting software designed with new RevRec Standards in mind.

Cloud Accounting Diocesan Organizations

How Diocesan Organizations Can Unleash the Power of Cloud Accounting

If running the finances at a religious organization is a challenge, running the finances at a diocesan organization takes that challenge and multiplies it. Not only do you have to lead financial decision making for multiple funds within one organization, you have to oversee the financial decision making for multiple funds in multiple locations.

The Diocesan CFO Oversees Dozens, if not Hundreds of Separate Entities

While each parish, school, or charitable entity may have its own finance manager and board to whom he or she must answer, the financial team at the diocesan level has to be able to roll up all of the information into a single source of truth. For example, the financial team at our local Catholic dioceses receives reports from:

  • 50 Parishes (some dioceses have over 100)
  • 3 High Schools
  • 13 Elementary Schools (often intertwined with parishes), 2 Private Elementary Schools, 3 Pre-Schools
  • A regional Seminary
  • 3 Missions
  • A Diocesan Cemetery (not including parish cemeteries)
  • A Newspaper, a Television Program, and more.

Simply put, managing a diocese is not only vast, it is complex—with different levels of control and autonomy for each entity, different financial structures and reporting needs. In addition to this, the diocesan CFO may have partial or complete financial oversight for one or more Catholic Charities, which in turn have multiple funds and programs.

Managing Multiple Entities is a Challenge in Itself, Doing So on the Strict Budget of a Faith-Based Organization Makes it Tougher

Not only are you managing all of this, you are managing all of this on a much stricter budget, with stricter oversight, and more stakeholders. You need to report quickly and accurately, address problem areas immediately, and find a balance between unity and granularity.

What makes this harder is that you often don’t have the massive budget for an upgrade and implementation project with huge upfront costs. This leaves you with two options:

  • Keep on with the status quo:
    • Put faith into your ability to roll up all of the numbers with outdated, manual technology
    • Try to push forward with disparate systems and processes across multiple entities
    • Attempt to get a unified, single source of truth each month.
  • Leverage the Power of the Cloud:
    • Take advantage of an accounting and ERP software designed to provide low upfront costs and transparent monthly pricing.
    • Get real insight into the numbers with configurable, easy, point-and-click filtering of real time data.
    • Drill down into the numbers of each parish, school, cemetery, or program.
    • Unify processes across every entity to save time each month.
    • Track the performance of multiple entities, gaining real insight into the metrics and performance of each on your schedule.

Intacct: Accounting Software for Diocesan Organizations

Intacct has provided accounting software for both faith-based and multi-entity organizations for nearly two decades, and has handled everything from single-location churches to multinational, multi-entity companies. Consider this: Intacct is built for growth, able to handle the needs of organizations with:

  • 100s of entities: Intacct automates multi-entity management and financial consolidations for customers with hundreds of locations in their organization
  • 1,000s of users: Our biggest customers are improving productivity with up to thousands of users on Intacct
  • 100,000s of transactions: Customers are quickly and securely processing hundreds of thousands of daily transactions with Intacct

The only cloud financial management system endorsed by the American Institute of CPAs, Intacct can help you to strengthen stewardship, gain efficiency, and grow funding.  The video below shares with you just how effective Intacct is at managing the finances at your diocesan organization:

Leverage the Cloud: Webcast for Diocesan Organizations

As a reseller of Intacct for religious and multi-entity organizations, we are well positioned to help you leverage the power of cloud accounting. We invite you to learn more about the software and its functionality by registering for an upcoming Intacct webcast, How Diocesan Organizations are Improving Stewardship with Modern Technology, in which experts will present challenges and opportunities for diocesan organizations, sharing:

  • How to reduce manual processes
  • How to automate financial, compliance, and operational reporting
  • How to gain real time insight for outcomes, performance, and impact
  • How to remain GAAP compliant under old and upcoming rules

Running the finances at a diocesan organization is complex, but by leveraging the power of the cloud, you can take control of diocesan fiscal management. Register here for the webcast, learn more about Intacct for diocesan organizations, and contact rinehimerbaker for more information.

Real Time Information Cloud Accounting

How the Cloud Provides Real Time Insights for Real Time Decision Making

Financial professionals at growing organizations face a ton of challenges. From ‘doing more with less’ to ‘taking on more roles to support the company and inform executives,’ there is little time to waste. Unfortunately, with this rapid growth comes the fact that there will only be more work to do in the future, and with the talent gap that exists, it’s unlikely you will have the help to do it. This is why it’s important to save time wherever you can and improve the speed and confidence in the way you make decisions.

The Need for Speed

One of the biggest challenges that growing organizations face is that employees need to do more without adding staff. However, as an organization grows, there are more transactions, more requests from stakeholders, and more numbers to crunch. This means more work inputting data into the accounting software (or worse—spreadsheets), manipulating the data into something useful, and creating actionable outputs in the form of reports.

Speed and automation were just a couple of the eight things you should look for in an accounting software solution. Click the aforementioned link to see part 1, and read part 2 of that blog here.

Three Reasons You Need Accurate Real-Time Information At Your Business

We briefly recognized lack of speed as one of the top challenges in our blog on knowing when QuickBooks no longer makes the cut, but would like to talk today about why speed and real-time decision-making is so important for organizations looking to jump on new opportunities when the time is right.

The Agility You Need

The beauty of working at a small business is that you can move faster than an enterprise. Unfortunately this agility can’t be recognized without the right information at the right times.

If you are spending too much time crunching the numbers that your company can’t recognize the first-mover advantage that exists when there are no committees and sub-committees of decision makers and influencers. Real-time decision making requires real-time information, when you need it, where, you need it, and how you need it:

  • When You Need It: With smarter accounting from Intacct, organizations can generate reports with the click of a button—no downloading of files or manipulation of data within Excel.
  • Where You Need It: Out of the office? Generate a report. On your phone? Approve an expense. Thanks to its cloud-based design, you can access Intacct securely wherever and whenever you need.
  • How You Need It: Slice and dice your information how you see fit. Intacct is the only mid-market cloud financial application that shows business and operational metrics by any dimension that matters to your business.

Accuracy You Can Rely On

Did you know that nearly every spreadsheet contains errors? If you are driving the decision making at your business with financial metrics, you need to make sure that the numbers are right, as an incorrectly calculated number could mean that you are jumping at an opportunity that you can’t fund, or taking a holding stance when you actually could make a move.

With over 11,000 customers, Intacct has a repeatable, accurate, and efficient way of stacking up the numbers, and has the development capabilities to provide the answers you need.

Time Savings to Deliver Better Strategy

With APQC estimating that nearly half of a financial professional’s time being spent on transaction processing—making sure the lights are on—they also estimate that only 18% is spent on control, 17% is spent on decision support, and 16% on management activities.

With all this time spent on basic activities, and so little being spent improving the business, there is a lot of room for improvement. Executives want fast, reliable, and concise information about how decision A will impact outcome B.

APQC found that successful companies have worked hard to boost the productivity of their transaction processing, simplifying systems, reducing the number of vendors, employing workflow automation for processes like invoice approvals, streamlining ERP environments, and standardizing to a single chart of accounts.

If you hope to take the steps to reduce the time spent processing transactions so you can get back to improving the business, you need to automate what you can so you can put those skills to better use.

Learn Even More

Our latest whitepaper, Taking Your Accounting System to the Next Level, explores some of the warning signs, challenges, and opportunities that organizations face when they outgrow entry-level accounting software. Download the whitepaper here, take your understanding even further by reading the 2017 Buyer’s Guide to Accounting Software on Intacct’s website, or learn more by reading the preview of our whitepaper below.

How to Identify Performance Obligations under the new Revenue Recognition Standard

ASC 606 Step-by-Step Part 2: Performance Obligations

The effective date for ASC 606 is rapidly approaching, with public companies needing to complete the transition to the new standard by the end of this year, and private companies having just under 18 months to make the move. In today’s deep-dive, we would like to explore in detail the second step of the five-step process: Identifying performance obligations. Read more

Free up your schedule with cloud accounting

How Cloud Accounting Delivers the Hidden Value of Wasting Time

Getting more done in less time and finishing a task early. Doesn’t it sound fabulous? Also too good to be true, perhaps, because there’s always something we can do to with that extra time to be even more productive. But why not take a counter-intuitive approach: use that extra time to do anything but work. You just might get more done in the log-run. Read more

Cloud Automation

How Intacct’s Cloud-Based Financial Software Supports Growing Businesses with Automation

When growth is the name of the game, your next move isn’t always “increase headcount.” With today’s cloud-based financial software systems, technology steps in to create pivotal process efficiencies and boost the productivity of the team you already have in place. Automation is key. It helps you make the most of your existing resources so you can invest more strategically than you ever thought possible. Read more