At rinehimerbaker, we know accounting. We also are pretty well versed in accounting software. We recently discussed some of the most important features you should be looking for from a new accounting software, and would like to continue that discussion in part two of this two-part series.
Note: Part one highlighted the importance of having focused software that eases your day-to-day and month-to-month operations, ready to grow with you. See part one of this series here.
5: Implementation
As you look into new accounting software, two of the most complex and time consuming processes you will face—regardless of the vendor or partner—is the implementation and training process. You are entrusting someone to move a lot of information from your old accounting software to your new one and set your company up for success.
In this, it’s important to look for an accounting software that meets your timeframe while still allowing you all of the functionality you will need. Knowing what to expect during the process—timeframes, costs (direct, indirect, and hidden), and more—can help prevent the project from getting derailed.
We’ve discussed some of the key factors in a recent blog, How Long Does It Take to Implement a New Accounting System?
6: Short Learning Curve
In addition to implementation, any end users will need to learn about the software—new features, how to accomplish basic tasks, how to accomplish advanced tasks, and more. This decision can’t be understated, because some of the software options on the market today require a highly specialized skillset to do something as simple as generate or customize a report.
There are many factors that go into how easy—or hard—it is for your team to learn a new accounting software, including:
- Whether it is a best of breed (only train specific users) or suite (train for every module you implement),
- The age of the solution (older software is built on older and more complex code—less point-and-click operation)
- The initial focus of the software (the more bells and whistles, the more training—solutions that grow and become more robust when you need them to be are easier to train)
These are a few considerations and decisions need to be made based on the overall technical aptitude of your team and ability to learn new products. This should be discussed with vendors, implementation/training partners, and customers of the software who are similar to your organization.
7: Integration
As we discussed in our Suite vs. Best of Breed article, integration is one of the key selling points of best-of-breed options, as point solutions are designed to do one thing well and allow other departments to choose what’s best for them as well. Suites often have much more complex (read costly) integrations that rely on hand-coding to operate if you choose to use something from outside of the vendor’s suite.
Whether you’re looking for a suite to handle all of the following or are looking for the best of the best based on your needs with a best-of-breed option, you should be looking for convenient “point-and-click” integrations (straightforward enough not to require IT skills) with commonly used applications such as:
- CRM and sales force automation, like Salesforce.com
- Human resources
- Inventory and fixed assets
- Project management
- Payment processing
- Payroll and ACH
Learn more about some of the options you have in the Intacct Marketplace, a resource for business software purchasers looking to connect applications.
8: Support
Whether you’re purchasing directly through the vendor or through an industry- and location-focused reseller like us, you should expect a knowledgeable, supportive, and focused partner who can walk you through the purchase, implementation, training, and long term operation of the software.
Support from Partners Means Support from Vendor to Partner
A good vendor and partner should be recognized for their reseller/partner program, as quality vendor-to-partner training is the first step in customer success.
Each year, CRN—a magazine for the solution provider industry—ranks channel programs based on a vendor’s ability to prepare their partners for success and only gives five-star ratings to the best of the best. It’s a good way for companies who are considering reselling a specific software to decide on whether or not the investment is worth it, but it’s also a good way for you to learn if your partner will be well-trained and able to help you.
If you love slowly progressing slideshows, you can view the 5-Star vendor guide here. If you’d like us to get to the point, our accounting software vendor of choice, Intacct, received top ratings in the cloud category.
Getting Focused Support: It Pays to Work with Someone in Your Location
If you’re looking for a partner to implement and train, it’s helpful to work with someone who knows you. Some states and locations will have different needs, and it’s important to have a support partner who understands your needs. As a company who started as an accounting firm and expanded to focus on the software game, we know all of the laws and regulations that face your Florida business, and are able to get to know you very well.
Conclusion
Choosing a new accounting software is a tough process that should be done with the input of everyone who will be using it. Knowing not only what to look for but who to work with can separate a successful implementation from a failure.
It’s important to shop around—for both the software and resellers. Think of your accounting software decision as you would a more complex kitchen remodel. You’re not only deciding on whether you want a Viking, a Wolf, or a Thermador, you’re also deciding on the people who have to be walking around your house during the remodel process. The same goes for a software implementation project.
We think you’ll like us at rinehimerbaker. Get in contact with us to learn how we can help you.
Additional Reading
Learn even more by reading the just-released 2017 Buyer’s Guide to Accounting Software and the Intacct Guide, Essential Features of a Modern Accounting System.
Infographic: Seven Deadly Sins of Financial Management
/0 Comments/in Intacct, Outgrowing QuickBooks /by rinehimerbakerAs your business grows, you begin to notice that the challenges of today take a little bit longer to address than they used to. With more growth comes more data, and with more data comes more time needed to complete basic tasks like closing the books each month. Unfortunately, in the wake of growth, too many businesses commit one or more of the following sins that limit visibility and cause business pain.
Related: What to Do When You Realize You’re Outgrowing QuickBooks
Seven Deadly Sins of Financial Management
A recently released infographic took a look at common business practices that hinder growth, especially when you’re outgrowing entry-level accounting software like QuickBooks, noting the following seven sins that finance leaders commit, many of which can slow your business to a grinding halt:
See the Entire Infographic
The following infographic shares more about how you can gain absolution for these sins, so that you don’t end up in accounting hell (or worse—jail).
Related: Three Reasons Your Accounting Team Wants Intacct
Gain Absolution with Modern Accounting
If you want to fight off expense tracking sloth, spreadsheet gluttony, and more, you need to swallow your pride and understand that it’s not you, it could be your processes or systems. Learn more about taking control of your organizations financial future by downloading the whitepaper, Eliminating the Risks of Spreadsheets in Finance, as well as by perusing the 2017 Buyer’s Guide to Accounting Software.
Ready to learn more? rinehimerbaker has released a new whitepaper for companies outgrowing QuickBooks.
Outgrowing QuickBooks—How to Know It’s Time to Change shares some of the biggest challenges that businesses face when growing, and the opportunities they have to ease growth.
Learn more by reading the first 3 pages of the whitepaper below:
IRS Form 990: What Nonprofits Need to Know
/0 Comments/in Intacct, Nonprofits /by rinehimerbakerFor nonprofits who follow a January 1-December 31 calendar, one of the most important dates of the year is coming up: Form 990 filing day. Just as March 15 for corporations and April 15 for individuals, May 15 holds a great deal of importance for tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations who have to file this form to provide the IRS with the information required by section 6033.
Used by the government to determine whether you can retain tax exempt status for the year and charity evaluation organizations who determine if donor money is being used properly. As the date rapidly approaches, it’s important to have your house in order so as to avoid any kind of last-minute issues or crunches that could pop up if you wait.
Why You Need to File Your Form 990
If you’ve been operating for a while, it’s likely you know why it’s so important to file a Form 990—providing the public with information about your financials so that possible donors know your funding sources and so that you can prove that their money is going toward your mission. It’s also important so that you can keep your tax exempt status—failure to file for three years in a row means automatic revocation of tax exempt status.
According to Cullinane Law Group, since 2011, more than 500,000 nonprofits across the country automatically lost their tax-exempt status for this reason. Additionally, the IRS has no appeal process for automatic revocations due to failure to file an appropriate Form 990 for three years. Without this status, your organization could be subject to paying income taxes. Additionally, you can avoid paying user fees and filing additional documents with the IRS by submitting your Form 990 each and every year.
Different Variants of Form 990
Depending on your size and organizational focus, there are three variants in addition to traditional Form 990: 990-EZ, 990-N (e-Postcard), and 990-PF.
Schedules for 990-EZ, 990, and 990-PF
Additionally, those filing a Form 990 may need to complete additional Schedules in order to communicate their funding and status, listed below:
Public Charity Status and Public Support (Schedule A), Schedule of Contributors (Schedule B), Political Campaign and Lobbying Activities (Schedule C), Supplemental Financial Statements (Schedule D), Schools (Schedule E), Statement of Activities Outside the United States (Schedule F), Supplemental Information Regarding Fundraising or Gaming Activities (Schedule G), Hospitals (Schedule H), Grants and Other Assistance to Organizations, Governments, and Individuals in the United States (Schedule I), Compensation Information (Schedule J), Supplemental Information on Tax-Exempt Bonds (Schedule K), Transactions With Interested Persons (Schedule L), Noncash Contributions (Schedule M), Liquidation, Termination, Dissolution, or Significant Disposition of Assets (Schedule N), Supplemental Information to Form 990 (Schedule O), Related Organizations and Unrelated Partnerships (Schedule R).
Companies Exempt from Filing Form 990
Not all nonprofits have to file annual returns. Generally, the following do not have to file Form 990:
The Form 990 is Necessary and Important
Much like a 10-K for publicly traded organizations and their potential investors, Form 990 will be seen by the public. However, your organization relies on donations, volunteers, and grants, so making sure the form is accurate, that overhead is minimized, and that you can prove yourself as a viable mission-focused organization can be the difference between growth and collapse.
For many nonprofits, using spreadsheets and hope is not a strategy that can lead to high ratings. With spreadsheets and other manual financial processes so error prone, they could be forcing your organization to hire additional accounting professionals or worse, putting you at risk for audits.
Our friends at Intacct recently presented an on-demand webinar on strengthening accountability and preparing for the precipice of an audit. Learn more about how you can improve reporting, accuracy, and your ability to remain compliant by watching the webinar, Strengthening Nonprofit Accountability through Audit-Ready Financials, or by reading The Nonprofit CFO’s Survival Guide: A Mini “Field Manual”
Learn more about Intacct for Nonprofits and how rinehimerbaker can help you implement it for success in future years as it grows with you.
Moving Your ERP to the Cloud? Learn the Basics of the Cloud Computing Stack
/1 Comment/in Cloud /by rinehimerbakerIf you’re considering moving your ERP processes out of legacy systems and into the cloud, you’re coming face-to-face with some terms that might be new to your finance and accounting team. There’s Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS)—and they’re collectively referred to as the Cloud Computing Stack. You’ll want to be familiar with these terms as you explore your cloud-based options.
But before we “unstack” the components of cloud computing, let’s examine why you’re looking at cloud solutions in the first place.
Why the Cloud is the Frontrunner
Cloud computing is monumentally different from running traditional installed software, such as QuickBooks, on desktop machines. Today, growing companies choose cloud computing platforms and services to provide their teams with flexibility and functionality they simply can’t unleash from their existing systems.
When transitioning to a more powerful, poised-for-growth system, companies appreciate the ability to:
The Cloud: A New Way to Manage IT Services
Cloud technology changes the way your business pays for and uses technology. It enables you to replace legacy systems, installed software, and manual processes with more efficient, hosted, and vendor-serviced solutions. What’s the right solution for you? This brings us to the three levels of the cloud computing stack:
Infrastructure as a Service (IaaS)
It’s not likely you’re considering an IaaS solution for your new ERP system, but it helps to know what’s at the bottom, or foundation, of the stack. It’s the infrastructure: the basic computing power, storage, and hardware components of a computing system. A company using an IaaS solution essentially outsources hardware—think “virtual machine.” The servers and other hardware are remote (housed in the cloud) and belong to the vendor; the company’s internal IT team is responsible for the operating system, applications, and other software that runs on the virtual machines.
Platform-as-a-Service (PaaS)
With a PaaS solution, a company outsources their hardware and operating system. On top of these two pieces, the company’s software developers can build their own applications. Rackspace describes it as a “platform for the creation of software, delivered over the web…without the complexity of buying and maintaining the software and infrastructure underneath it.” As such, it’s a great fit for companies who want to maintain control over software application and development—and who want to manage deep customization of their solution and keep it “in-house.”
Software as a Service (SaaS)
You’re most likely looking at an ERP solution that’s delivered via SaaS. With a SaaS solution, the cloud provider gives you everything you need, from the servers to the software to the user support. There’s no need for your company to do any IT administration or development work: the cloud-based solution is completely on-demand. The software application and your company’s data are securely housed in your vendor’s remote data centers and are accessed through an internet connection on any device. And you don’t pay for licenses, as software use is flexibly subscription-based with by-user pricing.
Accounting software should be with you for at least five years—and should have the capability to grow with your business. The key is scalability. As your business grows, and as you add new entities or locations, your financial and accounting needs will rapidly change. You don’t want to keep changing your processes and underlying software with each “next step.” Taking accounting, operations management, and reporting to (and from) the cloud assures the scalability required to keep growing without the stops and re-starts that you want to avoid.
Want to learn more?
What are the Different Software Delivery Methods?
Why Cloud and Finance Go Together
Eight Things to Look For in an Accounting Software (Part 2)
/0 Comments/in Intacct /by rinehimerbakerAt rinehimerbaker, we know accounting. We also are pretty well versed in accounting software. We recently discussed some of the most important features you should be looking for from a new accounting software, and would like to continue that discussion in part two of this two-part series.
Note: Part one highlighted the importance of having focused software that eases your day-to-day and month-to-month operations, ready to grow with you. See part one of this series here.
5: Implementation
As you look into new accounting software, two of the most complex and time consuming processes you will face—regardless of the vendor or partner—is the implementation and training process. You are entrusting someone to move a lot of information from your old accounting software to your new one and set your company up for success.
In this, it’s important to look for an accounting software that meets your timeframe while still allowing you all of the functionality you will need. Knowing what to expect during the process—timeframes, costs (direct, indirect, and hidden), and more—can help prevent the project from getting derailed.
We’ve discussed some of the key factors in a recent blog, How Long Does It Take to Implement a New Accounting System?
6: Short Learning Curve
In addition to implementation, any end users will need to learn about the software—new features, how to accomplish basic tasks, how to accomplish advanced tasks, and more. This decision can’t be understated, because some of the software options on the market today require a highly specialized skillset to do something as simple as generate or customize a report.
There are many factors that go into how easy—or hard—it is for your team to learn a new accounting software, including:
These are a few considerations and decisions need to be made based on the overall technical aptitude of your team and ability to learn new products. This should be discussed with vendors, implementation/training partners, and customers of the software who are similar to your organization.
7: Integration
As we discussed in our Suite vs. Best of Breed article, integration is one of the key selling points of best-of-breed options, as point solutions are designed to do one thing well and allow other departments to choose what’s best for them as well. Suites often have much more complex (read costly) integrations that rely on hand-coding to operate if you choose to use something from outside of the vendor’s suite.
Whether you’re looking for a suite to handle all of the following or are looking for the best of the best based on your needs with a best-of-breed option, you should be looking for convenient “point-and-click” integrations (straightforward enough not to require IT skills) with commonly used applications such as:
Learn more about some of the options you have in the Intacct Marketplace, a resource for business software purchasers looking to connect applications.
8: Support
Whether you’re purchasing directly through the vendor or through an industry- and location-focused reseller like us, you should expect a knowledgeable, supportive, and focused partner who can walk you through the purchase, implementation, training, and long term operation of the software.
Support from Partners Means Support from Vendor to Partner
A good vendor and partner should be recognized for their reseller/partner program, as quality vendor-to-partner training is the first step in customer success.
Each year, CRN—a magazine for the solution provider industry—ranks channel programs based on a vendor’s ability to prepare their partners for success and only gives five-star ratings to the best of the best. It’s a good way for companies who are considering reselling a specific software to decide on whether or not the investment is worth it, but it’s also a good way for you to learn if your partner will be well-trained and able to help you.
If you love slowly progressing slideshows, you can view the 5-Star vendor guide here. If you’d like us to get to the point, our accounting software vendor of choice, Intacct, received top ratings in the cloud category.
Getting Focused Support: It Pays to Work with Someone in Your Location
If you’re looking for a partner to implement and train, it’s helpful to work with someone who knows you. Some states and locations will have different needs, and it’s important to have a support partner who understands your needs. As a company who started as an accounting firm and expanded to focus on the software game, we know all of the laws and regulations that face your Florida business, and are able to get to know you very well.
Conclusion
Choosing a new accounting software is a tough process that should be done with the input of everyone who will be using it. Knowing not only what to look for but who to work with can separate a successful implementation from a failure.
It’s important to shop around—for both the software and resellers. Think of your accounting software decision as you would a more complex kitchen remodel. You’re not only deciding on whether you want a Viking, a Wolf, or a Thermador, you’re also deciding on the people who have to be walking around your house during the remodel process. The same goes for a software implementation project.
We think you’ll like us at rinehimerbaker. Get in contact with us to learn how we can help you.
Additional Reading
Learn even more by reading the just-released 2017 Buyer’s Guide to Accounting Software and the Intacct Guide, Essential Features of a Modern Accounting System.
Eight Things to Look For in an Accounting Software (Part 1)
/0 Comments/in Intacct /by rinehimerbakerWhen you’re outgrowing an entry-level accounting software, you know what you don’t want: The headaches, hassles, and time drains that come from the manual processes and underwhelming functionality. However, as you look toward a new solution, it’s important to know what you do want from your next solution.
In this two-part series, we look to share with you some of the important things you should be looking for in an accounting system built for your business as it grows and matures over the next five, ten, or twenty years. In part one, we will be discussing the importance of a solution built for your industry, why you need to be thinking long-term, how to get the information you need when and where you need it, and how to get the reports you need based on the business drivers you choose.
In part 2, we will be talking about why you need something that’s easy to learn, ready to integrate, ready to help you, and built for the modern business. See Part 2 of What to Look for In Accounting Software here.
1: Industry Focus
For growing businesses, you may have been able to survive at first with a generalized product that could handle the basic needs of your business. But as you continue to grow, you notice that you need the numbers and workflows built around your business—a professional services firm needs effective hours tracking and expense management while a distribution firm needs insightful purchasing and inventory management while a franchise needs multi-entity design.
While there are few niche accounting software options, solutions like Intacct have the focus and resources to design their solutions around your specific industry, thanks in part to their best-of-breed design (focused solely on accounting—plays well with complementing applications), experience in the middle market (nearly two decades), and highly effective product teams who know your industry and its needs.
Add on top a network of partners like us, and you have the design, knowledgeability, and support to use the software to the best of your abilities.
2: Scalability
One of the biggest mistakes that a company can make is to focus too much on the present and ignore the future. It’s why newspapers are failing (sad!) and the term digital disruption is actually a thing—companies ignoring possible changes in the future that ultimately sink them.
However, you should always be thinking growth, and shouldn’t be looking for an accounting system that will only suit you for the next year or two. An accounting software should be with you for at least the next five years and should be able to grow with your business.
Seek out an accounting software that supports your business growth and can prove it—with case studies of businesses sized similarly to you today and where you intend to be in a 5-, 10-, or 15-year period.
3: Immediacy/Automation
One of the first signs that you’re outgrowing your current accounting software is that it’s taking longer and longer to close your book each month and that it’s becoming harder and harder to generate the reports you need in a timely manner.
This is why you need to ditch the spreadsheets, and take full advantage of automation in order to stand tall during a period of growth. A few things you should look for:
Learn more about the dangers of spreadsheets and the importance of automation here.
4: Insightful Reporting
As you grow, it’s likely that you have more people to whom you must answer. It also means you can’t be wasting time and money waiting on a third party to code custom reports because of the immensely complex reporting needs of some accounting software or ERP options.
However, thanks to automation and point-and-click reporting in Intacct, you can have answers to questions from sales, customer service, board members, or investors in minutes—not days. Better yet, you can customize these reports based on your business drivers, specific metrics or workflows. Learn more about reporting functionality in Intacct here, or get even deeper understanding of it by reading this data sheet.
Conclusion: Finding What’s Right for Your Business
As an Intacct Partner, rinehimerbaker has the skills you need to learn, implement, and operate your new accounting software in the cloud. Learn more about Intacct, as well as our services for businesses like yours by contacting us.
2017 Buyer’s Guide to Accounting and Financial Software
/0 Comments/in Intacct /by rinehimerbakerWhen you’re looking at new accounting software, it pays to have the best information possible in order to make not just an informed decision, but an educated one. It’s important to look for information from a variety of sources that can allow you to select an accounting software built for your organization—rather than a one-size-fits-none option, a solution not meant to handle your growth, or one that offers the wrong features for your unique business needs.
This is why we would like to share with you one of the most reliable, educational, annual reports on finding and selecting accounting software for the modern age: The 2017 Buyer’s Guide to Accounting and Financial Management Software.
Written by Intacct, this year’s edition provides a plethora of important advice on selecting a modern accounting software built around your unique needs, including how to select a delivery model, how to avoid “cloud in name only” solutions, and a step-by-step guide to evaluating and selecting a solution for your goals.
Introduction: The Modern CFO’s Balancing Act
Financial leaders today balance the need to manage an increasing level of business complexity with the need for speed. You’re expected to keep your eye on multiple entities with multiple regulatory frameworks and multiple currencies. Think that’s complicated? Now add frequent change to the equation. A monthly financial check-in isn’t good enough for today’s CFO. You need the agility to make decisions at a moment’s notice—and those decisions must be based on the real-time financial truth.
Here’s the question. In today’s complicated business climate, is your accounting software helping you grow and compete—or holding you back? This guide will help you understand whether it’s time to make a move. You’ll discover:
Get the Full Report: 2017 Buyer’s Guide to Accounting Software
This free guide, written by Intacct, should be one of the first sources you turn to when considering a new accounting software for your business. Learn more about growing and competing in a modern business world by downloading the guide here.
The 3 Top Reasons your Accounting Team Wants to Upgrade to Intacct
/0 Comments/in Intacct /by rinehimerbakerIf you’ve made the decision to replace your existing accounting system—but you haven’t pressed “Go”—you’re probably weighing the pros and cons of on-premise versus cloud-based software. Almost every growing company reaches this impasse, so congratulations! But if you haven’t gotten feedback from your accounting team regarding their new system wish list, now’s a great time. They just might tip the scales in the direction of cloud-based solution. And here are the 3 reasons why:
They Want Anytime/Anywhere System Access
Consider your team members’ digital lifestyles. They have smartphones in their pockets or sitting on their desks during the workday. They’re using them to communicate with family and friends and probably have them hooked up to your company e-mail so they can stay up-to-date while on-the-go. If they don’t have the same easy, 24/7 access to their accounting systems…well, you have to wonder.
These thoughts may have crossed their minds. This doesn’t mean they want to work around the clock, but it does mean that they’re learning to engage with people and work differently than ever before. They’re beginning to expect mobile functionality and seamless experiences, whether they’re working on their desktop, laptop, tablet, or smartphone; in the office, at home, or while on the road.
Modern accounting software like Intacct makes it easy for your team to access financial data when they need to, so they can be productive when and where they want to be. Find out more in What Does It Mean to Have Anytime, Anywhere Accounting Access?
They Want Automation
Here’s what your accounting team is thinking: “Come on, manual processes are so yesterday! We’re a growing company and there’s a real need for speed.” They’re working in a digital economy, and the bigger your company gets, the more important digitization becomes. And digitization and automation are two peas in a pod.
At a certain stage of company growth, the manual processes that used to work start slowing people down. Manual processes are fine when the task is small—but there’s a point when enough is enough, and technology is adopted to start driving (or supporting) the process. It becomes a question of costs, but actual costs and opportunity costs.
While your team probably doesn’t maintain many paper-and-pencil records, they’re likely keying in the same information two or more times into different systems and using yet another manual process to sync up the data. Think QuickBooks and Excel. Working this way leaves your data vulnerable to human error and your staff vulnerable to burnout and decreased productivity. If this is your reality—then you’re already seeing the costs of not working faster.
A cloud-based accounting system like Intacct will put your team on the fast-track to productivity and growth—and you won’t have to worry about opportunity costs again.
They Want Integrations
If your team uses other financial applications, from proprietary custom apps to systems like SalesForce CRM, ADP payroll, or Expensify, they definitely want to see them interconnected. Because for them, connected systems mean more efficient workflows: less manual processing, cleaner data, and more actionable insights. “Better information” means “better results.”
As your company grows and continues to add more business tools and processes, it will become more important for data coming from disparate sources to synchronize. Think of it as harnessing the power of Big Data. ystem integrations enable faster access to better information—and superior reporting capabilities that uncover more opportunities for both operational efficiencies and strategic growth.
Intacct is built for system-to-system communication. Learn more about it here.
Stop Relying on Spreadsheets and Luck—There’s a Better Way
/0 Comments/in Intacct, Outgrowing QuickBooks /by rinehimerbakerSt. Patrick’s Day has come and gone, and if you’re still hoping for the “Luck of the Irish” when it comes to accuracy and efficiency in managing accounting processes at your growing business with entry level accounting software, we have some bad news for you. At some point, your luck will run out, and all of the negativity will manifest itself, leaving you mired in mediocrity.
Fortune Favors the Prepared
Whether the downfall begins with a corrupted or overloaded QuickBooks File, the discovery of a fatal error in your spreadsheet (88% of spreadsheets have some kind of error), or some other form of mistake that puts your business in peril, it’s time to stop relying on luck as a business model.
According to the Ventana Research Report, Eliminating the Risks of Spreadsheets in Finance, spreadsheets are cumbersome, risk- and error-prone, and separating you from the visibility you need and deserve.
The report, available for download from Intacct, goes on to note that while a vast majority of executives at midsized organizations (91%) are hoping that finance can play a bigger, more strategic role in the future, too many finance professionals can’t make that happen due to a lack of time and other resources.
Make Accounting Strategic Again
So what can you do to empower your finance teams to think more strategically—now and in the future? Ventana provides in-depth analysis of three goals on which you should focus:
Save Time, Improve Accuracy: Stop Hoping for the Luck of the Spreadsheet
Spreadsheets are great for personal productivity, but when they’re used for complex processes, their weaknesses begin to manifest, and your organization begins to feel the pain. In fact, organizations that have made the move to an enterprise application like ERP are not only able to save time and money, they are able to allow financial professionals to focus their attention where it matters—driving strategic growth. Learn more in the Ventana Report, Eliminating the Risks of Spreadsheets in Finance, available from Intacct.
Whitepaper: Outgrowing QuickBooks
rinehimerbaker has released a new whitepaper for companies outgrowing QuickBooks. Outgrowing QuickBooks—How to Know It’s Time to Change shares the challenges that businesses face when growing, and the opportunities they have to ease growth. Learn more by reading the first 3 pages of the whitepaper below:
A Brief Look Into Revenue Recognition Standards Part 2
/0 Comments/in ASC 606 IFRS 15, Intacct /by rinehimerbakerIt’s hard to sum up the profound effects that the ASC 606/IFRS 15 Revenue Recognition Standard will have on businesses, as the standard affects nearly every department within nearly every business in nearly every industry. If you have a contract with a customer, you will have to make some changes in order to be compliant with the new GAAP, and the deadline is rapidly approaching.
In part one of this two-part series, we introduced you to the basics of the new standard—who it affects, what it changes, and how to learn more. Today, we will be talking about the basics of the five-step revenue recognition process and offer you additional resources to prepare for making the shift.
Five Steps to Revenue Recognition
One of the most important topics of discussion regarding ASC 606/IFRS 15 is the process in which revenue is recognized. The process consists of the following five-step process starting with contract identification and ending with revenue recognition.
Identify Contract(s) with a Customer
In-Depth AnalysisStep 1: Identify Contracts and Thresholds:
A contract is an agreement between two or more parties that creates enforceable rights and obligations. The guidance in this Topic applies to each contract that has been agreed upon with a customer and meets specified criteria. In some cases, this Topic requires an entity to combine contracts and account for them as one contract. This Topic also provides requirements for the accounting for contract modifications. (See paragraphs 606-10-25-1 through 25-13.)
Identify Performance Obligations in the Contract
In-Depth Analysis: Step 2: Identify performance obligations
A contract includes promises to transfer goods or services to a customer. If those goods or services are distinct, the promises are performance obligations and are accounted for separately. A good or service is distinct if the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. (See paragraphs 606-10-25-14 through 25-22.)
Determine the Transaction Price
In-Depth Analysis: Step 3: Determine the Transaction Price
The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The transaction price can be a fixed amount of customer consideration, but it may sometimes include variable consideration or consideration in a form other than cash. The transaction price also is adjusted for the effects of the time value of money if the contract includes a significant financing component and for any consideration payable to the customer. If the consideration is variable, an entity estimates the amount of consideration to which it will be entitled in exchange for the promised goods or services. The estimated amount of variable consideration will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. (See paragraphs 606-10-32-2 through 32-27.)
Allocate the Transaction Price to the Performance Obligations in a Contract
An entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract. If a standalone selling price is not observable, an entity estimates it. Sometimes, the transaction price includes a discount or a variable amount of consideration that relates entirely to a part of the contract. The requirements specify when an entity allocates the discount or variable consideration to one or more, but not all, performance obligations (or distinct goods or services) in the contract. (See paragraphs 606-10-32-28 through 32-41.)
Recognize the Revenue When (or as) the Entity Satisfies a Performance Obligation
An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer services to a customer). For performance obligations satisfied over time, an entity recognizes revenue over time by selecting an appropriate method for measuring the entity’s progress toward complete satisfaction of that performance obligation. (See paragraphs 606-10-25-23 through 25-30.)
There’s More to Revenue Recognition Than That
The full text of ASC 606 can be found in the FASB Accounting Standards Codification (link to the FASB’s Web site; registration required), and additional guidance is continually announced by FASB/IASB on the topic, with the latest guidance released December 2016: ASU 2016-20, Technical Corrections and Improvements to Update 2014-09, Revenue From Contracts With Customers (issued December 2016).
Are There Gaps In Your Revenue Recognition Process?
As the date rapidly approaches, now is the time to act. Under the new ASC 606 standard, contracts are the basis for how organizations must recognize revenue. This places significant pressure on your accounting system. In addition to handling contract-related data, it must support revenue recognition and allocation, revenue reallocation, and expense amortization.
To determine whether your current software fits these requirements or if gaps exist, ensure it can:
Having the right software in place now can help you avoid headaches later, as nearly all of the software on the market today is ill-equipped to handle the needs of businesses under the new standard, says Brian Sommer of Diginomica:
“For those firms that elect to defer a software upgrade, they might confront 1-2 ugly alternatives . . . develop a custom application to support the new requirements . . . [or] create some makeshift functionality via a combination of CRM, financial package software and spreadsheet tools. Those firms that choose this path might find their RevRec ‘solution’ to be a jumble of potentially risky or temperamental spreadsheets.”
Prepare for ASC 606: Related Resources
ASC 606 Compliance starts with having the right information. Learn more about contract and revenue management software built to handle the needs of your business, be sure to download the following whitepapers, Six Rules for ASC 606 and Why Compliance Can’t Wait, and read up on the following to prepare:
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A Brief Look into Revenue Recognition Standards Part 1
/0 Comments/in ASC 606 IFRS 15, Intacct /by rinehimerbakerThe biggest change to accounting since Sarbanes-Oxley, ASC 606/IFRS 15 is on the horizon, and unlike the current regulatory environment, this verbiage isn’t changing and the effective date isn’t getting moved back again. In this two-part series, we look to explore the basics of this highly complex shift, and offer recommendations on how you can begin.
Background: ASC 606/IFRS 15
The FASB and IASB issued their converged standard on revenue recognition in May 2014. The standard provides a comprehensive, industry-neutral revenue recognition model intended to increase financial statement comparability across companies and industries and significantly reduce the complexity inherent in today’s revenue recognition guidance.
A Delay in Adoption
The date was delayed one year to its current state: Annual reporting periods beginning after December 15, 2017 for public companies and annual reporting periods after December 15, 2018 for private companies.
Few Companies Have Made the Switch
Nonetheless, even with this delay in place and expected to be final, a recent study by the Connor Group found that 87% of public companies haven’t made the switch (based on SEC filings), and the numbers are likely even more dire for private companies.
What ASC 606 Changes
The biggest change that ASC 606 makes for businesses is that revenue will be recognized based on “performance obligations” similar to deliverables, with each performance obligation being accounted for as a standalone good or service as defined within a contract and recognized when the good or service is transferred to the customer.
Five Steps to Revenue Recognition
The standard introduces a five-step process to recognize revenue:
We will discuss this further in part two, but for more information, see the overview from Deloitte.
Who ASC 606 Affects
ASC 606 Affects Many Industries
While we could make it easy as saying “ASC 606 affects all businesses who have contracts with customers,” because, in reality it does. However, to be more specific, the standard will have the most profound impact on the following industries: Aerospace, Communications, Defense, Engineering, Law, Media, Information Technology, Management Consulting, Marketing Services, and Pharmaceuticals, per Blue Hill Research.
ASC 606 Affects Many Departments
The standard also impacts more than just the accounting department:
What Can You Do to Prepare?
It starts with having the right information. Stay tuned for part two of this series, which will share an in-depth exploration into some changes you will need to make. Until then, watch the following video from Intacct, learn more about contract and revenue management software, and be sure to download the following whitepapers, Six Rules for ASC 606 and Why Compliance Can’t Wait.