You are Not A Babysitter: The Age of Value-Added Finance Professionals

How do you conquer the age of FinTech or as Joe Woodard dubbed it: #theRiseoftheMachines ?

Let’s start by debunking this insidious rumor. The rise of automation will leave finance professionals as babysitters of software.

Can you think of a teacher, coach, professor, or boss that was a glorified babysitter? How much did you like them? How much did you value them?

Teachers that babysit are often how we discover the fact that we can learn and act on our own. Yet you still found yourself wishing you had a great teacher…

Why?

Great teachers are not babysitters. They facilitate learning through:

  • Providing alternative explanations
  • Assisting the problem-solving process
  • Through knowledge of their subject, guiding their students ahead

A great teacher adds value to you as a student by empowering and guiding you. Great financial professionals do the same thing for their clients.

No one likes a glorified babysitter in any advisory role. Finance professionals should never find themselves babysitting a client’s books or accounting software.

Automation and AI, like ProRata, are tools. Just like whiteboards or Promethean boards are tools. Just like a bad teacher, you can get away with being a glorified babysitter. No one is going to be a fan of that except maybe the unenthused. Your dream client certainly isn’t waiting for the opportunity to work with a glorified babysitter.

No one said it better than Joe:

“The Future [Finance] Professional: The best and brightest professionals will endure the longest – those who can perform tasks that cannot and ought not to be replaced by machines, and tasks we prefer to leave in the hands of human beings” #RiseOfTheMachines Joe Woodard

If you taught yourself finance, you are 100% capable of conquering the age of FinTech. You just have to introduce yourself to the new tools and workflow.

Let’s start by addressing that, at times, too vague term  “value added accounting/finance.” How is that measurable? What does that mean?

Finance professionals are experts when it comes to value. Anyone working in finance knows that value is subjective. Depending on how you approach numbers, value can be seen differently. Ultimately presenting the best ‘value’ involves knowing what your target audience/niche wants.

Yikes, no wonder they leave it so vague.

We need an answer that is better than “be a resource” or “add value.” But, there is no way that I could write all the blogs needed for every client’s needs. Let alone how to market to all those niches.

Good thing we have an expert here. You. You are an expert on your clients both current and potential.

Through this new blog series, we will give you the tools to be battle ready. We will discover and define value added finance. We will help you define what it would mean to be a resource for your ideal client/employer.

Coming January 26th: Defining your niche/client base.  

FinTech is not going away and neither are you. Register for our free newsletter today to get every blog in this series.

Use the hashtag #ConquerFinTech, mention us @ProRata on Twitter, or comment below.

 

NEW BLOG SERIES: How to Conquer the Age of FinTech: Finding Your Niche, Mastering Solutions, Marketing Your Skills, and Taking on the IoT and the Cloud Subscription Frontier

 

The ProRata team and I would like to welcome you to our newest blog series, “How to Conquer the Age of FinTech: Finding Your Niche, Mastering Solutions, Marketing Your Skills, and Taking on the IoT and the Cloud Subscription Frontier.”

No matter the type of financial professional: CFO, corporate controller, a bookkeeper, fractional/freelance/full-time, etc; you will benefit from a brief course through this blog on how to #ConquerFinTech .

In 8 weeks, you will be ready with this battle-tested advice:

Topics Being Covered:

  • Defining Value Added Finance and FinOps – No More Vague Advice Like “Be a Resource:” Titled:: You are Not A Babysitter: The Age of Value-Added Finance Professionals
  • The Art of Identifying and Studying Your Niche (Yes, CFO/controllers/staff accountants have niches too!)
  • How do I Master my Niche and Prevent Myself from Losing the Trust of my Client(s) Making a Bad Recommendation?
  • Why Make Use of the App Ecosystems and Cloud Products: How to Leverage Them to #ConquerFinTech?
  • What Skills Do I Need and How Do I Get Great at Them to #ConquerFinTech ?
  • How to Market Your Value: Part 1
  • How to Market Your Value: Part 2
  • Introduction to the Frontier of IoT and Cloud Subscription: What Accountants Need to Know

Want this series in your inbox every 2 weeks? Let us know you want it! (subscribe button with I want to #ConquerFinTech)

Next week: You are NOT a Babysitter: The Age of Value-Added Finance Professionals
Use the hashtag #ConquerFinTech, mention us @ProRata on Twitter, or comment below.

How-To Shift to Annual Based Subscriptions Without Driving Your Accounting Staff Up a Wall

The deferred revenue ‘problem:’ that issue that arises when you move away from monthly subscriptions, is now long gone thanks to automated revenue recognition solutions. With automated revenue recognition, the deferred revenue “problem” is similar to that annoying additional step to have sliced bread by actually cutting it up – 1928 we have sliced bread. In 2016, we have ProRata, an automated revenue recognition solution for QuickBooks Online users. ProRata is literally the best thing since sliced bread 😉

 

    With the deferred revenue “problem” solved, the question remains, in a time where “accounting firms are pushing for subscription revenue,” why not push for the annual subscription?

 

      It is key to note that in the same article citing the push for subscription revenue by accountants followed that statement by mentioning that this push leads them right into the cloud (where software exists to support such a model). They are doing more with less and saving time for clients. The article can be found below under “Quote Source.”

 

    MarketingExperiments by MEC Labs found that annual subscriptions even at a discounted rate of about 40% the monthly rate are sizably more profitable than their monthly counterpart. Tucker Dawson at Price Intelligently shares that a combo of both monthly and annual optimizes income through ensuring lower customer acquisition cost in a calendar year, boosts customer retention thus lower churn rate AND his findings were for businesses that have monthly customers as their bread and butter as far as pricing. It’s no secret to the business world that annual is gold but it is also important to remember when shifting to annual, offering both prices as mentioned by the sources above is an important option for those balking at the idea of commitment elsewise you might be spending too much on sales.

 

    Automating your revenue recognition will simplify for accountants what just makes sense for your business model.

 

Sources:

http://www.marketingexperiments.com/improving-website-conversion/subscription-revenue.html

http://www.priceintelligently.com/blog/bid/194370/Boosting-MRR-Annual-Vs-Monthly-Subscriptions-in-Your-SaaS-Pricing-Strategy

Quote Source:  (http://www.accountingweb.com/technology/trends/the-truth-behind-todays-biggest-accounting-trends?source=pe091616)

Software Startups and Revenue Recognition

Revenue recognition may be a mysterious concept to a lot of software startup founders, but it is an important accounting concept to understand when running a business.

Revenue Recognition Criteria

When a product or service is sold, certain conditions must be met for that product or service to be recognized as revenue. If you sell a 1 year software subscription for $1,200 in January, you can not recognize all $1,200 as revenue in January. It must be spread across the entire span of the subscription.

The criteria for recognizing revenue are:

  • persuasive evidence of an arrangement exists
  • delivery has occurred
  • the software vendor’s fee is fixed or determinable
  • collection of fees is probable

This is especially important for software companies who sell annual software agreements, charge maintenance fees, or do custom software development.

Deferred Revenue

Revenue recognition can be handled by creating a new liability account called Deferred Revenue. This is revenue that you have collected money for, but cannot recognize as revenue yet based on the criteria described above.

The journal entries might look like:

Record the entire amount against deferred revenue

DebitCredit
A/R $1,200
Deferred Revenue $1,200

Each month, recognize 1/12th against revenue

DebitCredit
Deferred Revenue $100
Revenue $100

Why is revenue recognition important for startups?

Venture Capital

Software companies who might pursue investment from venture capital firms will most likely be asked to provide financials that follow these guidelines. It’s beneficial to start doing this early to avoid re-stating revenue for past years.

Financial Institutions

Financial institutions, much like venture capitalists, will require revenue to be reported that meet these standards. You may be required to prepare statements in accordance to GAAP and provide these as part of your terms for financing.

How To Calculate Deferred Revenue

Deferred revenue is a important accounting concept for SaaS companies who have long term agreements such as annual and multi-year subscriptions. We will explain why and how to calculate deferred revenue.

Continue reading “How To Calculate Deferred Revenue” »

Earned vs. Unearned Revenue

What is the difference between earned and unearned revenue? When using the accrual basis accounting method, revenue must be recorded as it is earned regardless of when payment is received.

Continue reading “Earned vs. Unearned Revenue” »