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Increasing Project Profitability – 5 Strategies of Successful CFOs

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Increasing Project Profitability

Increasing Project Profitability – 5 Strategies of Successful CFOs

Today’s strategic CFOs have a central role to play in project-based businesses. With careful oversight and savvy strategic thinking, it’s possible for CFOs to maximize project profitability and directly grow the bottom line. Here are five strategies executives can take to cut costs and drive revenue:

Focus on Key Metrics

Large-scale data collection makes it possible for CFOs to track dozens or even hundreds of metrics. Each indicates something interesting, but only a few reveal the true performance of the project:

    • Bill Utilization

 

  • Project Margins
  • Annual Revenue Per Billable Consultant
  • Annual Revenue Per Employee

 

The key is to identify the most important metrics and focus primarily on monitoring and improving those rather than others.

Prioritize Data Analysis

Collecting data is important, but the scope and scale only matters if it leads to better analytics and insights. CFOs who focus less on gathering data and more on analyzing/applying it extract greater value even from less data. When it’s time to make key decisions about what projects to pursue and how to improve them, CFOs have the in-depth understanding they need to act confidently.

Empower Project Managers

In project-based companies, there is a close relationship between finance, project managers, and client services. The representatives on the front lines depend on having instant access to accurate and up-to-date financial information, which is why CFOs should provide financial dashboards and encourage collaboration. With the right tools it’s possible for project participants at all levels to improve profitability.

Study Costs on a Granular Level

Companies that bill according to a fixed-cost project model must understand in detail where costs are coming from. Spreading the cost evenly across entities only obscures where inefficiency and waste exist. By tracking direct and indirect labor costs it’s possible for CFOs to single out the most and least profitable projects.

Practice Data-Driven Decision Making

Companies have lots of data at their disposable, but turning it into actionable insights remains a challenge. Stakeholders either don’t have access to the right data or don’t have the expertise to interpret data. The CFO can solve this by prioritizing communication and collaboration and integrating financial data with other data sets. When everyone is making decisions empirically and objectively the profitability of projects improves automatically.

You can explore each of these strategies in-depth by downloading this free white paper. Once CFOs understand how to improve project profitability, the question becomes how to improve it faster? The answer is to implement a leading financial management solution like Sage Intacct.

A suite of smart tools makes data more intuitive and more accessible. Stakeholders from the C-Suite down have the ability track and study projects in depth, taking less time to identify exactly what is working and what is not. If you’re ready to reap full value from your current projects and more value from your future ones, schedule a consultation with InCloud360.

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Project-Based Accounting Software – A Checklist for Success

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Project-Based Accounting Software

Project-Based Accounting Software – A Checklist for Success

The complexity of project-based accounting is only exacerbated by the need for accuracy, relevance, and currency. Technology helps to bridge the gap, but not every solution provides the real-world functionality companies require to make accounting into an asset.

Evaluating the depth and breadth of features a solution provides is essential due diligence. To ensure that any solution you’re considering is well suited to project-based accounting, look for these strengths:

  1. Flexible Accounting Architecture – Any solution should flexibly adapt to your existing accounting architecture. Rather than forcing you to adopt new workflows or implement customized code, the solution organically accommodates your present and future accounting needs.
  2. Simplified Time and Expense Management – When it’s simple to track time and expenses it’s easier to manage their effect on revenue. Plus, understanding where, when, and how resources are being used in a very precise way leads naturally to improvements.
  3. Accurate Project Costing – A system that accurately breaks down project costing in-depth makes it easier to forecast budgets and spot emerging trends. Greater visibility also leads to improved project pricing and creates bargaining power with vendors.
  4. Automated Project Billing – Meeting exacting billing requirements takes enormous amounts of human input and is highly-vulnerable to errors and mistakes. Automated project billing solves both problems and enables accountants to spend less time on data entry and more time on high-value projects.
  5. Streamlined Consolidations – Companies undergoing growth must quickly but carefully add accounting entities. An accounting solution should make that as easy as possible and automatically consolidate new data with existing data.
  6. Intelligent Profitability Forecasts – The success of a project-based business depends on strategically selecting projects. Tools that provide real-time business insights reveal what project/clients/markets are most profitable. Decision makers are able to act boldly but confidently in order to drive revenue.
  7. Modern Cloud Orientation – A cloud-based accounting solution provides greater flexibility, productivity, and accessibility while also being cheaper and less complex. Every one of the initiatives above is enhanced when the cloud is helping to do the heavy lifting.

None of these capabilities is more imperative than the others. More importantly, without any one of these features, a project-based accounting solution is likely to fall short. If the goal is to make accounting both better and easier, a solution must check every one of the boxes above.

This free whitepaper outlines exactly what kinds of tools and techniques to look for in your next accounting solution. To explore what they would look like in your company as well, contact InCloud360.

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Sales Tax Changes – Key Issues Under Debate in 2018

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Sales Tax Changes

Sales Tax Changes – Key Issues Under Debate in 2018

2017 was an active year for sales tax policy, and 2018 promises to be no different. One of the most contentious tax issues of recent decades – revenues related to online sales – is likely to reach a head this year and force a radical rethinking about how e-commerce is conducted.

The problem is that with this issue and many of the other pressing sales taxes changes of the day, the future is unclear and uncertain. Companies know that new rules are coming, but the details and consequences are still being hotly debated. That forces companies to prepare for multiple potential outcomes simultaneously.

Some of the key changes and questions being considered are outlined below. Keep these top of mind as you begin to prepare your 2018 tax strategy.

Currently, online retailers like Amazon pay sales tax on their own sales but not on the marketplace sales that it facilitates. That is about to change in Washington state, and a bevy other states are pushing tax requirements forward, but there are almost as many different requirements as there are states. Sellers may be mandated to meet reporting requirements, establish a physical presence, or pay hefty back taxes.

Is Consumer Use Tax Reporting Coming?

Many states that do not currently require retailers to collect sales tax are either planning to or planning to put consumer use tax reporting requirements in place. The first state laws around this issue took effect in Colorado in 2017, and nine other states quickly followed the lead. More laws are coming, each with their own unique mandates, creating a sweeping new tax obligation for retailers to manage.

Are Out-of-State Sellers on the Hook?

A 1992 Supreme Court decision made it illegal for states to tax companies with no physical presence in the state. The court agreed this year to hear a challenge to that decision, creating the possibility of big new tax bills for companies that operate remotely. Further complicating things is a quartet of bills that all propose to close remote sales loopholes but through drastically different means.

What Does Tax Reform Mean?

The tax reform recently passed by Congress promises to have a broad and deep impact on US tax policy. However, exactly where, where, and how that impact will be felt is still entirely unknown. Whether positively or negatively, tax reform will only complicate all of the debates above while requiring a whole new approach to taxes generally.

Each of these issues is discussed in-depth in a recent free white paper from Avalara. The company specializes in automating sales tax and compliance, and automation is more important than ever. Adapting to changes in the tax code is a time- and labor-intensive process with heavy consequences for error. A solution like Avalara makes adaptation automatic no matter what changes go into effect.

When you’re ready to learn more about the advantages of Avalara, contact InCloud360.

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Software CFOs: Managing Metrics for Continued Success

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The Next Innovation from Sage Intacct

Software CFOs: Managing Metrics for Continued Success

The software industry is evolving away from a focus on on-premises software and towards a focus on SaaS offerings. Even companies that continue to provide on-premises options now often sell subscription-based services as well.
That evolution is distinctly important for CFOs because key metrics and performance benchmarks are changing as well. Traditionally, software CFOs looked at revenue, expenses, and profits to measure performance. And since sales figures are what drives the bottom line, the sales department led the way in revenue forecasting.

Now that subscriptions are what drives revenue, CFOs must consider both financial and operational data at the same time. Success is based on retaining customers and growing the size of the hosting platform, which are actions that can’t be easily expressed through point-in-time financial metrics.

Adding New Metrics to the List of KPIs

Older performance benchmarks are still important. But they must be considered in concert with newer metrics that are specific to the SaaS business model:

  • Recurring revenues
  • Subscriber numbers
  • Growth rates
  • Revenue per customer
  • Customer acquisition cost
  • Customer maintenance cost
  • Customer lifetime value
  • Scalable hosting platform cost

In addition to being more complex, SaaS financial management operates at a faster pace. Growth happens suddenly and swiftly, and when one metric moves all the others are impacted. This is a challenge, but in the hands of the right software CFO it’s also an opportunity.

Piloting Performance with a Financial Management Platform

Successful software companies must track revenue metrics, customer metrics, cost/expense/profitability metrics, and cash simultaneously. Since each one of those categories includes multiple complex indicators, a single platform for financial management is essential.

CFOs gain real-time visibility when both financial and non-financial data are integrated and updated in one place. A platform also allows analysis, reporting, and benchmarking to be automated. As a result, KPIs are always accurate, up-to-date, and instantly available.>

Once a platform is in place, it becomes easier to forecast revenues, expenditures, and liquid cash. Consequently, red flags and golden opportunities are apparent far enough in advance for software companies to prepare. Devising strategy and allocating resources becomes a clear and confident process. And companies enjoy a level of stability and sustainability that would be impossible otherwise.

Sage Intacct is a financial management solution that turns complexity into accessibility. Working with new metrics becomes easier than ever and directly impacts the bottom line. And the CFOs who lead the effort become indispensable to the software companies they serve. Consult with InCloud360 to learn more about using metrics as a launch pad for growth.

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How the CFO Drives Project Profitability

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How the CFO Drives Project Profitability

How the CFO Drives Project Profitability

For companies that work on a project basis, the KPI is project profitability. The challenge is that determining whether revenue truly outweighs costs is tricky, and no single individual or department has sole responsibility for profitability.

With so many moving parts in play, oversight and leadership are essential. Those are the responsibilities of the CFO, and the best ones are able to coordinate efforts in a way that maximizes project profitability. Here’s how:

Focus on the Key Metrics

Complex projects require simple performance indicators. Focusing in on the metrics that reveal the true health of a project allows early corrections to be made along with honest post-project evaluations. It’s up to every CFO to identify the right metrics for each project, but these five tend to be insightful and instructive:

    • Utilization
    • Project Overruns
    • Project Margins
    • Annual Revenue Per Billable Consultant
    • Annual Revenue Per Employee

     

    Prioritize Data Analysis

    Gathering data is important, but analyzing it is what actually delivers value. The analysis process is time- and labor-intensive, which is why the CFO must make it a priority and allot resources accordingly. At the same time, the CFO should be searching for solutions that expedite the analysis process so that less time is spent searching insights and more time is spent applying them.

    Support the Needs of Project Managers

    The success of a project is a shared priority even if the project manager does not work in the accounting and finance department. Since financial data is crucial for managing any project, CFOs must be proactive about distributing accurate, updated data in real time. When accountants and project managers are able to collaborate on a shared dashboard it eliminates unnecessary confusion and delay.

    Track Direct and Indirect Costs

    With projects that are billed based on time and materials it’s fairly easy to track direct and indirect costs. When the project is billed on a fixed-fee, however, it’s harder to understand how input affects output. Instead of thinking of costs as a single entity, CFOs must look at them on a granular level. That way they can identify the projects, clients, and employees that drive the most profit.

    Improve Data Quality and Access

    CFOs have a leading role to play in helping companies make data-driven decisions at all levels. That starts by creating data sets that are comprehensive, complete, free of errors and omissions, and rich in context. The next step is to make that data available to the widest number of stakeholders as seamlessly as possible. When organizations get great at using data they get much better at managing projects as well.

    Sage Intacct is a comprehensive financial management solution created to improve projects, departments, and the C-Suite too. When you’re ready to take the reins of profitability, contact InCloud360.

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ASC606 Makes the Case for Automation

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ASC606 Makes the Case for Automation

ASC606 Makes the Case for Automation

Automation is nothing new to accountants. At least since the advent of the adding machine financial professionals have been using intelligent tools to work more effectively. What is now different is that automation has become essential rather than merely beneficial.

The new revenue recognition rules mandated by AS6 606 recently went into effect for public companies and will soon go into effect for private ones. The details of these rules are familiar to everyone by now. And, unfortunately, so are the complexities, complications, and consequences.

ASC606 is the most sweeping set of changes to impact accounting in a decade. The law requires accounting departments to take on huge new volumes of work, meet the new standard for accuracy, and act within very narrow timelines. That puts accountants in a difficult position – adopt drastic new ways of doing things or else be in breach of the law.

In response, accounting departments are increasingly identifying automation as a mission-critical tool that is uniquely able to make regulatory compliance accessible and reliable. More than any other solution, automation is getting companies over the hump in regards to ASC606. Here are a few examples of how:

Keeping Costs in Check

Trying to accommodate new revenue recognition rules using manual processes would require adding an army of new accountants to the ranks. Automation that is calibrated for ASC 606 is able to handle the same volume of work in less time and with far less human input. Companies are able to adapt to the new regulations without having to transform the current makeup of their accounting department.

Accelerating Time to Close

The extra work created by ASC606 places a significant stress on existing accounting resources. At exactly the time when accounting departments are trying to work faster in order to gain a strategic advantage, new rules slow the pace down to a trickle. Automation allows these departments to accommodate larger workflows while dedicating more of their individual time to productive or strategic initiatives. Adapting to ASC 606 actually maximizes the potential of accounting departments.

Eliminating Errors and Omissions

Companies that attempt to comply with ASC606 using manual processes must contend with more mistakes as a result. That means both compliance and the integrity of the ledger are put at risk. Automation has just the opposite effect. Larger amounts of work are completed with greater consistency and accuracy. In that way, ASC 606 does exactly what it intends to do – improves the quality of accounting overall.

It’s possible to forego automation and still comply with ASC606. But the burden is astronomical, and the simple act of keeping pace causes companies to fall behind. Automation is the solution that makes implementing, optimizing, and utilizing a solution easy.

But don’t just settle for any automation. Rely on the very first solution designed specifically for ASC 606 – Sage Intacct, the tool that makes compliance convenient. No matter how prepared you are for ASC 606, Sage Intacct can improve the process. Contact InCloud360 to learn more.