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.

Are You Leaving Millions On The Table By Making This One Mistake?

Happy December ProRata Blog Followers!

To start off December right, here is ProRata’s CEO Rob Farmer’s own words on how to potentially save tens, hundreds, thousands, if not millions of dollars often left on the table by one mistake:

Many startup founders we’ve spoken to at ProRata started out (or are currently) tracking revenue in a cash-basis. They soon realize the value in switching to an accrual-based revenue model.

Cash vs. accrual accounting

Simply put, cash based accounting would say that you recognize revenue as soon as you receive payment for it, regardless of when the service was performed.

Accrual based accounting recognizes revenue when the service is performed, even if it is pre-paid or on Net 30 terms. It it especially important for software companies who collect pre-paid subscriptions to understand how to recognize revenue over the life of the subscription.

Don’t leave money on the table

In a recent article on SaaStr, Anita Kutlesa talks about a CEO who lost several millions in his purchase price because revenue had to be converted from a cash-basis to accrual-basis at the time of sale. It’s important to understand how revenue should be recognized and to maintain your books on an accrual basis.

Don’t wait!

The earlier you start properly recognizing your revenue, the less headaches you will have in the future. You will save money by avoided re-reporting revenue and you will have a true snapshot of your company’s revenue. ProRata helps software companies who use QuickBooks to simplify and automate revenue recognition.

Don’t Feel Like a Turkey: Tips to Avoid These 4 Silly Mistakes

 

 

Don’t you hate that feeling?

 

You have worked all week and you are getting ready for the weekend. Exhausted, you head home. As you take a seat every part of you cringes: you made an error and it’s going to cost you.

 

It could cost you in all kinds of ways: time, money, credibility, consistency, peace of mind for the rest of the weekend, to name a few. The real question is, how can we avoid this feeling all together?

 

All together? We can’t. We’re human. But we can certainly lower the frequency by avoiding these 4 mistakes:

 

Mistake #1: Not Taking a Break Before The Final Edit Using These 3 Techniques

Read that first bit again. You are exhausted, and rightly so. It’s is the end of the week. Wrangling coworkers and massaging the numbers are not mental energy light task.  Take a BREAK!

1) two to ten minutes to walk around or stretch but you must be upright and on your feet

2) take a sip or two of a palpably cold beverage (try to avoid heavy eating as it will only exacerbate that tired feeling)

3) let your eyes focus on something from a considerably far distance (out the window, across the office, etc). By doing this you let your eye muscles readjust and relax. Not only can it help your ocular health, but it will help your eyes snag those last few errors in whatever you are working on.

 

Mistake #2: Performing Unnecessary Data Entry Leaving You Vulnerable to a Typing Error

We are typing quickly and one stroke wrong and it is a long headache later until we find the small slip. It’s in these instances we benefit from augmenting ourselves through an automated process.

An automated process is essentially creating your own virtual assistant that runs off and handles the tedious while you knock the important work out of the park.

 

Mistake #3: Working With the Wrong Keyboard or Desk Set Up

Have you ever sat at a desk and laid your hands on a keyboard and the setup felt all wrong?

Whether it be the keyboard you trained yourself to use, the desk height, or the product is plain poor and it is physically uncomfortable no matter how you contort it (I’m looking at you old, clunky keyboards of the early ‘00s), it isn’t working for you.

When it slows down your usual routine and hinders you from comfortably focusing on what needs to get done, you need to resolve it. As a fellow frugal individual I cringe at the idea of purchasing my own keyboard/seat/(desk is a little far) for work but if it will help you do your work mistake free, I would seriously consider it.

Point is, you need a good setting or errors will happen as your physical environment is not conducive to your strongest work.

 

Mistake #4: Did You Really Edit It or Did You Edit it the Way We All Cleaned Our Spaces as Kids?

Maybe you were a meticulous child and have no idea what I’m talking about but I guarantee you know a child like this. When asked to clean up they grab everything and pile it up quickly and shove it away.

The floor is technically clean and the stuff is technically put away, but come time to find anything it is near impossible. You don’t want to edit like that child “cleans” their room. It’s a technicality that in the end hurts you in the long term for some short term relief. Quick, in this case, is not quality.

But how do we keep ourselves from being that kid?

Have an adult keep you accountable 😉 Let your co-workers check you, have checks in place that require you to go through in a responsible, meticulous manner even when you feel like rushing.

Have any additional tips or mistakes to avoid? Comment below or hit us up on Twitter @ProRata !

Daylight Savings: Bet You Thought This Article Would be About a Q4 Promotion

     Daylight savings is this weekend and don’t worry, this article is not some cheap word play on the word ‘savings.’

 

     Do we save money and time for our clients?

 

     Of course, that is why you get ProRata.

 

     Is that what this article is about?

 

     No. We respect our readers.

 

     Time to understand this whole 2018 GAAP Compliance. Its scaring the daylights out of people. We’re getting calls.

 

     Let’s fall back on the literature and shed some light on why automating revenue recognition or at the very least getting a CPA to make sure you are absolutely compliant.

 

     The GAAP rules for 2018 have shifted and here are the area you need to look up if it is relevant to your business:

              -As of December 15, 2018, everyone is to be following FASB regulated guidelines (not

               just public companies)

              -SaaS companies will likely be required to make an estimate of “variable consideration”

             including any contingent usage fees or royalties (if you have contingent fees above and

             beyond the usual SaaS business, make sure to go to the FASB website)

               -Keep an eye out for distinct performance obligations as accounting units within a

               customer contract have changed for specific types of obligations (if you have obligations

                above and beyond the usual SaaS business, make sure to go to the FASB website)

               -Anything not covered by the standards previously that one would normally be at the

               company’s disgression must now be reported to standard

     The last three points specifically affects SaaS companies, otherwise it is business as usual. Overall a push for internal controls (automation acts as an internal control, especially of needlessly error-prone processes such as revenue recognition spreadsheets) has been a hallmark of rhetoric surrounding the new guidelines. Additionally, keeping good data that is uniform for investors and auditors is emphasized in compliment to encouraging businesses to have an internal control for obvious reasons such as keeping your business from going under and keeping you out of jail.

 

    Hope this helps! Please comment with questions below or @ProRata on Twitter. Enjoy falling back November 6th!

 

Why Accountants are on Cloud Nine with Cloud Computing: Cloud Accounting and Automated Revenue Recognition

Do you ever wonder if people have over-hyped the benefits of cloud accounting solutions and the future of accounting?

 

Among the cited reasons for shifting to cloud accounting solutions are added functionality, mobile device access/ease of accessibility, co-working opportunities, scalability, sped up processing, quickly manipulated databases, automation features, and robust reporting.

 

Needless to say, many of these functions have pros and cons. Only you will know how these functions will impact on your business. The overall finding, however, is that cloud accounting solutions are by far the best for the modern business.

 

We agree.

 

A quote written by Andrew Marder: “The tectonic shift of all the data we generate is also undergoing automation. We talk about removing double-entry issues to cut down on errors, but let’s be honest – this is data that was sometimes being entered into five different places anyway. Manual entry is the bane of clean data and we’re basically eradicating it from the process.”

 

That last phrase “the bane of clean data” so aptly describes why a business should automate and why automation of accounting processes acts as a tool that enhances the abilities of the finance professional. Processes like revenue recognition, to which one client referred to as ‘donkey work,’ are plagues on clean data. Cloud accounting solutions allow for those added functionalities such as automated revenue recognition to integrate with your current accounting software so that clean data is a promise and not a goal.

 

Sources:

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

http://www.smb-squared.com/5-reasons-to-try-quickbooks-online/

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)

Don’t Get SaaSy with SaaS: 4 Reasons Why SaaS Additions to Quickbooks Online Should be Embraced

There are great misconceptions about trusting SaaS additions over keeping certain processes such as revenue recognition “in house.” Let’s debunk!

     In Jeffery Kaplan’s “SaaS: Friend or Foe,” the benefits of SaaS additions and SaaS software annihilate the downloadable, less dynamic software through their ease of use and ability to be isolated if problems ever arise. SaaS solutions have been reported as:

  1. Having far less end user support issues

     2. Pay-as-you-go pricing and subscription models hold the SaaS company regularly accountable for your experience and upgrades

     3. SaaS products are known for their efficiency and absence of cost overruns

        Bonus note: ProRata magnifies an efficient operation that adds value to your company 😉

     4. Improved collaboration amongst team members and organizations due to increased access to information and software

“In house” is essentially robbing yourself of the benefits that SaaS provides by not being “in house;” one of the most cited reasons being security. In today’s security conscious market, SaaS providers bring in these five benefits in addition to being intensely invested in the security of your data. Its mutualism! We take care of you as fiercely as we take care of us.

For the original article, click here: http://www.webtorials.com/main/resource/papers/BCR/paper125/06kaplan.pdf

QuickBooks Online App Recommendations and the Adaptive Unconscious: Artificial Intuition Could Soon Be Recommending ProRata as Your Revenue Recognition Solution

ProRata Dashboard

 

     Artificial Intuition.

 

     At first glance an oxymoron, artificial intuition will change the way you are introduced to solutions thanks to data analytics. Intuition is a word we often associate with anything but artificial: “You’ll make the best decision, trust your gut,” “I knew my child was up to no good – mother’s intuition,” “Your boss has killer instinct when it comes to negotiating deals.” It is a knowledge that we know people don’t consciously have so we associate it with primal and nature-specific words. Let’s dive into some grossly simplified popular psychology!

 

     The mind consists of an conscious mind (problem-solving mind/executive mind/logic) and an unconscious mind (habitual mind/autopilot/intuition). We often think of the unconscious as primitive and it is, yet it is so far from it. It is the best evaluator, decision maker, and influencer of conscious decisions, making use of event based learning. When people feel like they are on autopilot or practice something until it is “second nature” that is the part of the brain they are training/have trained. It is far greater at crunching the lessons of past experience than your conscious mind can ever hope to toggle with. This is why experience is so invaluable as it is the only tried and true way of training the unconscious mind and influencing the conscious mind into making great decisions on the fly. This has been popularly referred to in cognitive psychology as the adaptive unconscious. However, the unconscious mind is fallible. It can try to use unlike experiences to influence your problem solving and can be primed to make decisions that you might not be fully aware of or happy with once you follow through (sources below).

 

     In the world of tech where the lifetime of a product or solution is the shortest it has ever been, how could the unconscious mind ever be prepared with the intuition to make the best decisions?

 

     Data analytics.

 

     Data analytics has provided a powerful tool from which stores and companies can provide you with artificial intuition: personalized recommendations. Not only does it suggest solutions conveniently as you search, narrowing your options, but perhaps its most vital role is that it promotes apps that based on other users experience, similar companies, etc, that you will get a recommendation that will mirror a decision you’d make if those experiences had been your own.

 

     It has been recently advertised that soon QuickBooks Online (QBO) App Store will use personalized recommendations meaning ProRata could soon be a recommendation for you to automate your revenue recognition. We say go ahead and trust your (artificial) intuition – it’s looking pretty good!

 

Sources:

Martin, N. (2008). “Habit” Upper Saddle River, NJ: FTPress.

QBO(https://developer.intuit.com/hub/blog/2016/08/05/introducing-personalized-app-recommendations-quickbooks-online)

QBO Firm of the Future (http://firmofthefuture.com/apps)

David McRaney “You Are Not So Smart”

Jonah Lehar “How We Decide”

Artificial Intuition: (http://artificial-intuition.com/intuition.html)

Welcome ProRata, Your Revenue Recognition Solution of Choice for Startups and SMBs

Are You Leaving Millions On The Table By Making This One Mistake?

Many startup founders we’ve spoken to at ProRata started out (or are currently) tracking revenue in a cash-basis. They soon realize the value in switching to an accrual-based revenue model.

Cash vs. accrual accounting

Simply put, cash based accounting would say that you recognize revenue as soon as you receive payment for it, regardless of when the service was performed.

Accrual based accounting recognizes revenue when the service is performed, even if it is pre-paid or on Net 30 terms. It it especially important for software companies who collect pre-paid subscriptions to understand how to recognize revenue over the life of the subscription.

Don’t leave money on the table

In a recent article on SaaStr, Anita Kutlesa talks about a CEO who lost several millions in his purchase price because revenue had to be converted from a cash-basis to accrual-basis at the time of sale. It’s important to understand how revenue should be recognized and to maintain your books on an accrual basis.

Don’t wait!

The earlier you start properly recognizing your revenue, the less headaches you will have in the future. You will save money by avoided re-reporting revenue and you will have a true snapshot of your company’s revenue. ProRata helps software companies who use QuickBooks to simplify and automate revenue recognition.