Allied Modular Building Systems is a company that has provided specialized modular structures like high-tech robot enclosures, audio sound booths, and portable office spaces to some of the largest companies in the world. Recently, they’ve experienced rapid growth which their outdated and disconnected on-premise solutions couldn’t keep up. This resulted in downtime and a slow response to customer needs.
The company knew it needed to update its systems in order to create faster processes. With some Microsoft solutions already in place, they implemented Dynamics 365 and Business Central to bridge the gap between their additional business applications. Kevin Piethman, CEO, stated: “Dynamics 365 has been really powerful for us over the years. Our estimating and sales departments use the Sales app all the through to win or lose. When an order begins, we promote it over to Business Central. That integration is a huge time save because we don’t have to duplicate the information in two different places. All the sales data can flow with the order. We have saved about 19 percent of the cost per order by making this change–it’s one of the reasons we decided to implement this solution.”
With a simpler IT infrastructure and faster way to track customer information and opportunities, Allied Modular has created a seamless project flow, reduced IT costs, and connected teams.
Simplifying IT processes and creating a smoother flow is just one way hundreds of companies throughout the world are using Business Central and Dynamics 365 to improve end-to-end processes. Others have used the solution for more flexibility in managing data centers, to scale up or down, and to eliminate data silos.
Below, we’ll discuss what you can do with a Dynamics 365 and Business Central integration and how it will benefit your end-to-end processes.
Our answer is that these systems are separated, yet integrated. They work in conjunction with each other to provide organizations with detailed data, more flexibility, and a centralized marketing and sales planning and operations system. Small startups, acquisitions, or mergers can especially benefit from having two separate systems.
Let’s dive into this a little more.
Keeps Data Accurate Throughout the Entire Lifecycle
When you login to your marketing system to review data, you know that some of the data you’ve gathered is duplicate or incorrect. However, this isn’t cause for concern as this data will be verified and cleaned later on. Having false or duplicate data in your operating system is concerning because you make decisions based on the data stored here and you need it to be accurate. This is why it’s crucial to have all data verified before it reaches the accounting system. That way, when you login to your operating system, only real and precise vendor data is displayed, helping you to make faster, more educated decisions.
Flexibility
The cloud has enabled businesses to gather information from dozens of sources like eBay, Amazon, Shopify, WooCommerce, Magento, and more. Dynamics 365, a powerful CRM system, has the flexibility to gather that data from the different sources, identify similar data from each source, and feed it to the ERP.
Centralizes Marketing and Sales Planning and Operations
If you’re thinking that your sales inventory and operations planning systems are running just fine separately, you may be right. However, there are a number of benefits to centralizing these two systems. One of the biggest benefits is that your sales and marketing would work in tandem with each other.
A central SIOP system allows marketing and sales staff to identify opportunities and act on them from a single dashboard. For example, if your sales team has just completed a sale of several pieces of construction equipment. Your marketing team would be instantly alerted to this sale, giving them the chance to push service contracts, preventative plans, or other equipment. Not only does this help you increase profits, but also drives faster decisions.
Another benefit to a centralized SIOP is that your entire company would have access to this informative data. These insights can be accessed at any time, anywhere.
Finally, large complex businesses who want to mask the true complexity of their organization can do so with a centralized SIOP as customers would only see a single, seamless process.
Saves Time on Startup, Acquisition, or Merger Projects
Gone are the days where you had to go through the interruption of an ERP migration when you had a new startup, acquisition, or merger project. With Dynamics 365 and Business Central, you can use one of the existing connectors to integrate the two systems with ease.
Designed to Work for You
If you’ve read this information and thought: “I’m just a simple, low-volume startup–this all seems like overkill or isn’t for me”, think again. The best part about Dynamics 365 and Business Central is that they can be used in virtually any organization thanks to its flexible, agile tools.
We’ll take a closer look at each solution’s features and how they can benefit your end-to-end processes next.
Both Business Central and Dynamics 365 feature a Power BI tool. This cloud-based reporting and analytics platform connects users to data stored throughout the organization through detailed reports and dashboards that provide deeper insight into various business teams and processes.
For example, if your business relies on a currency feed service, Power BI will aggregate all the data within your inventory and present it in an easy-to-read report or dashboard. You can even toggle between different views depending on what you’re looking for. Sales managers can look at how many items are stored at a specific warehouse location and inventory managers can ensure parts remain stocked or which locations are running low on certain items.
You can do all this and more from the ERP system, meaning you don’t have to build an integration between two systems.
As soon as the connectors in Dynamics 365 are turned on, they begin working with your CRM system.
Once this integration is established, it goes to work aligning data in your inventory so you can view this data in an easy to read, simple way.
If you’re a smaller company or a startup, this low-volume, simple integration is a perfect introduction to Microsoft solutions. However, it’s important to note that if you’ve customized Business Central or your CRM system, this integration may be difficult or impossible as there’s little room for customization between the two systems.
File Export/Import Method
This is one of the most frequently used tools within Dynamics 365. Using this tool, you can import your master data from a CSV or Excel file and also use other features such as:
Include or exclude certain columns from the spreadsheet.
Automate tasks.
Customize fields for the source and target side.
Create sales invoices that feature headers and lines.
This tool is a great tool to use if you’re wanting to integrate with other tools. The import/export method allows you to first create the design for the field and table mapping before you export the data from the system into the spreadsheet. You can then drop this spreadsheet into Dynamics 365 and import the data.
Power Automate
As part of the Office 365 subscription, Dynamics 365 features the Power Automate tool. This tool allows users to create automated workflows between various systems to save time, reduce costs, gather data, receive notifications, and more. Power Automate can easily integrate with your favorite apps like other Microsoft Stack solutions, Dropbox, Trello, and popular social media sites like Instagram, Twitter, and Facebook.
The tool also allows you to:
Automate business processes or tasks
Send reminders about tasks.
Connect to hundreds of public APIs or data sources.
Reduce time spent on repetitive tasks.
Protect sensitive data.
For example, illimity, a cloud-native bank in Italy, used Power Automate to simplify, streamline, and automate a slow, inefficient approvals process. Today, the company has saved a significant amount of time in customer requests using the features within Power Automate.
Dynamics 365 API Integration
To help you gather data from each of your applications, use the direct API integration in Dynamics 365. Setting this integration takes very little time, but is harder and more expensive to maintain. However, the expense is definitely worth it thanks to the speed and efficiency that is unrivaled in Power Automate.
The Benefits of Microsoft
Why go with Microsoft and not with another system? There are hundreds of CRM and ERP systems to choose from, so what makes Microsoft the best? The answer is flexibility. Few other systems provide the flexibility and agility that Business Central and Dynamics 365 do. From small, low-volume startups to large, complex, high-volume businesses, these systems can be configured to support your unique business processes. Streamlined, efficient processes lead to better customer services, more targeted marketing, and more effective sales strategies.
In addition to these benefits, Dynamics 365 and Business Central can help you:
Gain deeper insight into customer data using powerful, versatile tools.
Increase business as both these systems work together to analyze data and find promising leads or sales opportunities.
Provide your entire organization with fast, easy access to valuable data insights by storing data in one place.
Improve both customer retention and satisfaction by helping your sales, marketing, or customer service team respond more quickly and appropriately to their needs.
Microsoft prides themselves on creating solutions that are designed to work for you, making the list of benefits endless. Implementing just one of these solutions can be the catalyst to implementing others, helping you to further advance and improve your business processes.
Enjoy Customized Support from a Microsoft Partner
When you need assistance with either Business Central or Dynamics 365, contact JourneyTEAM, a Microsoft Gold Partner. With the help of our talented team of professionals who are well-versed in Microsoft solutions, we’ll help you get these solutions up and running as quickly as possible. Whether you need a lot of support or a little, we’re happy to provide it. Talk to a JourneyTEAM representative today!
JourneyTEAM was recently awarded Microsoft US Partner of the Year for Dynamics 365 Customer Engagement (Media & Communications) and the Microsoft Eagle Crystal trophy as a top 5 partner for Dynamics 365 Business Central software implementations. Our team has a proven track record with successful Microsoft technology implementations and wants you to get the most out of your organization’s intranet system. Consolidating your communication, collaboration, and productivity platform with Microsoft will save time and money for your organization. Contact JourneyTEAM today!
Article by: Dave Bollard – Chief Marketing Officer | 801-436-6636
JourneyTEAM is an award-winning consulting firm with proven technology and measurable results. They take Microsoft products; Dynamics 365, SharePoint intranet, Office 365, Azure, CRM, GP, NAV, SL, AX, and modify them to work for you. The team has expert level, Microsoft Gold certified consultants that dive deep into the dynamics of your organization and solve complex issues. They have solutions for sales, marketing, productivity, collaboration, analytics, accounting, security and more. www.journeyteam.com
While it’s mostly known as a customer relationship service (CRM) solution, Microsoft Dynamics 365 does far more than that. It not only offers a range of modules to optimize your business, but it’s also flexible enough to develop industry-specific solutions. JOVACO has done this for accounting firms. The resulting solution sits on top of the standard Dynamics 365 solution, while allowing for industry-specific business rules. It also helps with the initial setup as fields standard to the accounting industry are already there without requiring additional customizations or developments.
How Dynamics 365 can help your accounting firm
Integration between Dynamics 365 and Dynamics GP
Thanks to the integration between Dynamics 365 and Dynamics GP, data flows freely across the entire system. The information entered in timesheets and your planning tool will be reflected in the rest of the solution in real time. A timesheet like TEDI Time and Expense ensures real-time visibility on time spent on mandates, allowing for greater visibility on an employee’s activities of the week.
Specific invoicing process
A solution specifically designed for accounting firms accelerates all processes related to invoicing as well as your invoicing cycle. Different billing options lets you meet all your clients’ criteria easily. The integrated timesheet reduces the number of manual adjustments as hours are automatically entered to the right account.
Management of accounts and groups
The CRM functionality of Dynamics 365 can be leveraged to manage your mandates, clients, and contacts. Client information is centralized and up to date, ensuring that all users can access the latest data at all times. The classic client-to-contact relationship can be taken one step further to focus on groups of accounts to facilitate management the way accounting firms are more used to doing.
Increased autonomy for associates
The solution also gives the autonomy to your associates to make their own adjustments. Fewer requests are sent to administration for modifications, reducing their workload and the risk of errors. Associates can also benefit from improved visibility on key data such as the profitability of services. This allows them to make quicker decisions and strengthen their relationship with the accounts assigned to them.
Reporting adapted to your needs
Reports designed specifically to meet the needs of the accounting industry let you improve your analytical capabilities. Review profitability by service, associate, or staff member for better visibility into the metrics you need. This lets you better analyze the health of your organization and discover new business opportunities.
Ready to implement Dynamics 365 within your accounting firm?
JOVACO Solutions is a leading ERP and CRM solution provider operating in Quebec for over 35 years. As a specialist of Microsoft Dynamics business management solutions, we offer a wide range of products and services to meet all the needs of professional services firms and project-based organizations. We also offer specialized project management tools and timesheet add-ons fully integrated to Microsoft Dynamics solutions. Visit our website or contact us for more information.
With a background in finance at a technology solutions company, a document publishing and delivery organization and an accounting firm for midmarket companies, Chris Whitfield joined the nonprofit organization MANA Nutrition as CFO with a strong background in for-profit accounting principles.
That background has proven valuable in the nonprofit world as well, Whitfield relayed during a session at SuiteWorld19.
“Both for-profits and nonprofits are mission-based, the missions just tend to be a little different,” he said.
For example, MANA Nutrition has structured its organization more like that of a for-profit even while it maintains a strict mission-based focus. The Charlotte, N.C.-based nonprofit manufactures nutrient-rich milk suspended in peanut butter, a ready-to-use therapeutic food (RUTF) used to treat severe acute malnutrition, producing about 500,000 meals per day. As a manufacturer, it may seem to have more in common with for profits than nonprofits focused on services or curing diseases, but that’s not really the case, according to Whitfield.
“MANA is a mission-based organization,” he said. “Our mission is to save kids’ lives and have a meaningful impact on reducing the lives lost from severe and acute malnutrition.”
But for-profits and nonprofits have a lot more in common than one might assume, Whitfield assured the audience. Both have a mission, it’s just that for-profits’ mission is profit. Both have a similar organizational structure: an executive director and organizational leadership in the case of nonprofits and CEOs and senior leadership in the case of for-profits. And, both largely operate under the same GAAP principles, aside from a few exceptions, and work under the same fundamentals of accounting and internal controls.
“For-profit stakeholders are investors, and there’s nothing wrong with that. I’m a big believer in capitalism,” Whitfield said. “Nonprofits tend to be service focused. At MANA we have a view that our shareholders, who receive our dividends, are the kids we serve. We like to think of ourselves as having capital. We have benefactors who say, ‘I’m ready to invest in your business.’ Their return is not a financial return, it’s the dividends we give to kids.”
Those similarities, among others, offer finance professionals in nonprofits an opportunity to apply more for-profit principles to their organizations. For example, where a for-profit might focus on reducing costs to improve margins, MANA has reduced the cost of a case of RUTF from $ 60 when it first started to $ 38, allowing it to sell to aid organizations in greater volume at a lower price, increasing its impact.
Financial Statements
There are similarities in financial statements, according to Whitfield. One might be a statement of financial position (nonprofit) and another might be a balance sheet (for profit), but they’re essentially both balance sheets. While nonprofits consider their net financial position to be a derivative of total assets minus liabilities, for-profits view the balance sheet are the cornerstone of internal control wherein total assets must equal total liabilities plus equity (that is, net assets).
“I think it’s an important and subtle difference, but nonprofits should take a look at what their equity position is,” he said.
Nonprofits can take a lead from for-profits when it comes to reporting on financials. Typically, nonprofits are focused on reporting to external constituents, whether it’s a board or donors or maybe outside agencies or creditors.
“Creditors, while they want to see external audited reports, are just as interested in internal reports that measure the success of your organization,” Whitfield said. “At MANA, we don’t report a statement of activities, we report a balance statement and income statement, but also a monthly analysis, KPIs in production, etc. That’s been valuable with creditors.”
Revenue Recognition, Subscription Models and Promises to Give
Nonprofits can also benefit from following the for-profit world when it comes to revenue recognition and subscription models. All over the for-profit world businesses are adding subscription models whether it be ongoing maintenance contracts or meal delivery kits. For nonprofits, pledges, or promises to give, can be treated similarly. Typically, a nonprofit will book the pledge as a receivable with installments paid against it. That needn’t be the case for internal reporting.
“When I have unconditional promises to give that extend over one year, I approach it like a subscription model,” he said. “We record it as a pledge receivable but instead of income we take deferred revenue and recognize it when conditions of the pledge are met, whether that condition is event-based or time-based.”
Whitfield added, “however, we of course have to restate pledges to meet the requirements of GAAP for external reporting in our audited financial statements.”
Whitfield concluded by summarizing, “Nonprofit organizations typically have a very different mission-based focus from for-profit companies, but many underlying financial management considerations are the same. The financial function in nonprofits must be focused on meeting the reporting requirements of its internal constituents, on establishing and maintaining strong systems of internal control, and on maintaining a healthy organization that has the financial fortitude to carry out its mission.”
Posted by Christopher Miller, Distinguished Solution Specialist
New FASB standard offers guidance on accounting for cloud computing license costs and implementations.
I am frequently contacted by customers and our internal team about how to account for NetSuite costs. As cloud computing became more popular, businesses took different approaches to how they accounted for it on their financial statements. A few of the popular ideas were:
Treat a cloud computing arrangement as a fixed asset and depreciate it. Capitalize everything.
Present the contract as prepaid and amortize it as an intangible asset.
Amortize the contract as an expense and capitalize all of the implementation costs.
Reference the contract to lease accounting standards and follow those as an analogy for cloud computing.
Treat the cloud computing arrangement as internally developed software.
Each of these ideas had some merit. However, as the percentage of businesses using cloud products increased, the FASB and other standard setters realized that the “diversity” in practice was growing too large.
So, in 2015, the FASB issued ASU No. 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement,” to simplify to process. The goal was to help a business determine what kind of contract their arrangement included.
The key determination was to help a user know if their arrangement contained a software license or not. Using the guidance under ASC 985-605, customers are required to determine if their cloud arrangement contains a software license. If the answer is yes, then treat the contract as an internal use software intangible under ASC 350-40. If no, then account for the arrangement as a service contract.
The release of No. 2015-05 clarified several of the key questions presented above. If the cloud computing arrangement included a software license, then the contract was treated as internal-use software. This allowed the purchaser to capitalize the license and related implementation costs. It also clarified that when an arrangement didn’t have a software license embedded, that it was a service contract and should be treated as an operating expense. This clarification put an end to treating service contracts as fixed assets, etc.
However, ASU 2015-5 didn’t determine the process for handling the implementation costs of a service contract. Many of the same questions existed, such as whether you can capitalize implementation costs, or must they all be expensed?
To clarify the process of handling service contract implementations, FASB issued ASU No. 2018-14, effective for all filers after Dec 15, 2019.
Key Provision 1 – Apply Internal Use Software Guidance
When entering into a cloud computing contract that is a service contract, entities will now apply the same guidance toward implementation costs that are used for internal use software. Here are the key guidelines to be aware of when applying this new guidance:
Project costs to purchase, develop or install the software generally can be capitalized.
Activities related to testing, customization, configuration and scripting can be capitalized.
Training and data conversion costs are to be expensed as incurred.
These costs can be both internal and external, such as payroll, contractors and travel expenses.
Key considerations here are to consider how you define the different terms and the quality of your project timekeeping/management to identify the type of work performed.
Amortization of Implementation Costs
ASU 2018-15 states that implementation costs should be amortized over the term of the associated cloud computing arrangement service on a straight-line basis. In addition, it states that the usage rate (number of transactions, users, data throughput) should not be used as a basis for amortization.
In section 350-40-35-14 the guidance states additional periods to be included in the amortization period:
An entity (customer) shall determine the term of the hosting arrangement that is a service contract as the fixed noncancellable term of the hosting arrangement plus all of the following:
Periods covered by an option to extend the hosting arrangement if the entity (customer) is reasonably certain to exercise that option
Periods covered by an option to terminate the hosting arrangement if the entity (customer) is reasonably certain not to exercise that option
Periods covered by an option to extend (or not to terminate) the hosting arrangement in which exercise of the option is controlled by the vendor.
When reassessing the amortization term, an entity shall consider the following to reassess the term:
Obsolescence
Technology
Competition
Other economic factors
Rapid changes that may be occurring in the development of hosting arrangements or hosted software
Presentation
The new ASU makes a few critical changes to the presentation of cloud service contracts. A few highlights include:
350-40-45-2 An entity shall present the capitalized implementation costs described in paragraph 350-40-25-18 in the same line item in the statement of financial position that a prepayment of the fees for the associated hosting arrangement would be presented.
350-40-45-1 An entity shall present the amortization of implementation costs described in paragraph 350-40-35-13 in the same line item in the statement of income as the expense for fees for the associated hosting arrangement.
350-40-45-3 An entity shall classify the cash flows from capitalized implementation costs described in paragraph 350-40-25-18 in the same manner as the cash flows for the fees for the associated hosting arrangement.
The key takeaway for presentation in the new guidance is that no costs associated with a CCA Service Contract should be treated as depreciation or amortization and should all be included in operating income.
Disclosure Requirements
There are a few key disclosures required from the new ASU. Specifically they are:
The nature of its arrangements for cloud computing.
Any amortization expenses for the period
Major classes of implementation costs that have been capitalized
Accumulated amortization of the implementation costs
Conclusion
With the release of ASU 2018-15, the way to manage cloud computing contracts has clarity. It is now a three-step process that consists of determining whether an arrangement has a software license included. Manage the implementation project and capitalize the correct costs. Lastly present the costs correctly based on the new ASU.
Posted on Wed, October 9, 2019
by NetSuite filed under
Posted by Jason Glass,Senior Director, Partnership Development
As a starter system, QuickBooks is a logical and economical choice. It provides the basic functionality that companies need to get going, supports a chart of accounts and manages both accounts payable and receivable. But QuickBooks could also be holding businesses back from achieving their full potential. And not just QuickBooks customers, but the partners and independent accountants that support them.As companies start to grow, expand internationally, or encounter more complex financial reporting requirements, their dependency on the QuickBooks system can turn into a burden.
That’s because this general ledger system doesn’t manage inventory across multiple sales channels; provide insights into the products that companies have on hand at a given time; streamline their ordering processes; or manage the reams of data that these companies receive and generate on a daily basis. It can also fall short when it’s time to add a new business, analyze sales or manage complicated cash flow reporting. Indeed, QuickBooks can hold back a fast-growing business.
For independent accounting professionals and other businesses supporting the QuickBooks ecosystem, this means their fastest-growing, most successful clients are either seeing their growth slow, or walking out the door when they move to a different system. Unless, they support a more sophisticated system like NetSuite, these partners constantly need to replace successful clients with smaller, less established customers.
Though most customers probably recognize the shortfalls of QuickBooks and the need to innovate in order to keep pace, some may be reluctant to upgrade, replace, or enhance their business systems. Others aren’t convinced that they’ll be able to find a solution that can meet their needs in an affordable way, choosing to instead just “make do.” Unfortunately, those decisions can turn out even more costly in the long run.
Implementation partners and independent accounting professionals can often play a key role in helping a business to determine when the time is right to move on to a more sophisticated accounting system and what products might be right for them.
Here are five signs that it’s time for businesses to look beyond QuickBooks and implement a unified, cloud-based financial system:
They’re not sure what’s really happening across their businesses. When departments, management groups and teams can’t share information, tools, priorities and goals with one another, the siloed mentality kicks into gear and takes over. Companies can break out of this mindset by deploying a financial system that generates and shares insights and data in real-time across the entire enterprise.
Financial consolidation across systems takes ages. As they grow, businesses may find themselves dealing with a bewildering complexity of foreign currencies and languages, accounting standards, taxation structures and reporting and compliance requirements that far outstrip the capabilities of the standalone accounting applications they’d traditionally used for financial consolidation. Cloud computing offers a scalable model for sophisticated financial consolidation in a fraction of the time, and without the substantial capital expenditure of a typical on-premise ERP system. And by automating key accounting processes, a cloud ERP solution minimizes the risk of error and delay of manual approaches to multiple charts of accounts.
Adding new sales channels, product lines or revenue streams (domestically or internationally) is extremely difficult. As businesses mature and their market share increases, they will surely hit the outer limits of growth in their current markets. In order to implement the growth strategies and gain a competitive edge in the world market, they need an integrated business system that centralizes accounting, order management, customer relationship management (CRM) and ecommerce processes. When everyone has access to the same customer information and transactions, it’s easier to respond quickly to customer inquiries. It allows salespeople to spot opportunities to cross-sell and upsell, and teams can confidently track pending orders, service issues or overdue invoices.
They’re using more Excel spreadsheets and third-party applications to connect data. These band-aid solutions don’t “talk” or share data with one another, which means more human intervention, manual data reentry, errors and steps in the financial management process. With a cloud financial management platform, your clients’ marketing, finance, sales and inventory managers can all pull the exact data they need to understand trends and improve the accuracy of their forecasting. Because they all draw from the same data source, these users will have a more holistic insight into customer behavior at each stage of the transaction, and without the need for spreadsheets or bolt-on applications.
They need better revenue recognition, allocations, planning & budgeting and/or better reporting insights. Financial reporting isn’t getting any easier, and it can be especially challenging for companies that are growing, expanding into new lines of business or exploring their global horizons.
If a business is dealing with any or all of these issues, it’s likely a sign that they’ve outgrown their current systems. A comprehensive cloud-based solution like NetSuite supports all aspects of a businesses by unifying financials, sales, project and product management, ordering, invoicing and revenue recognition on a single platform. It will also help your firm minimize complexity across a broad range of operations, allowing insights into the entire business based on a single, customizable platform.
QuickBooks partners that move to NetSuite can make 30-50% margin on new license sales plus high margins on renewals and service. In addition, they retain their fastest-growing clients while expanding their client base with other companies looking to migrate from QuickBooks.
Visit www.netsuite.com/quickbooks for more information on switching to NetSuite and reach out to the NetSuite Partner Recruitment team today to get the conversation started.Complete our contact form here or email SolutionProviders@netsuite.com to find out more.
Receiving a contract or grant through a U.S. Small Business Administration program is a milestone, but you can’t just take the money and do whatever you want. If you don’t meet your contractual obligations, you won’t pass an audit. Not passing an audit can mean losing your funding or having to pay it back.
The audits you’re subject to depend on the type of funding you receive. If you want to pass an audit in the Small Business Innovation Research or Small Business Technology Transfer (SBIR/STTR) program, here’s what you need to do.
For contracts: understand the different types of audit
For instance, a pre-award audit looks at your price proposals, forward pricing, and indirect rates. If it’s your first time having a cost-reimbursement contract, you’ll be subject to a pre-award accounting system survey.
Post-award, the most common audit is the incurred cost audit. This audit is required for all cost-reimbursable contracts where you’re supposed to report year-end costs to the government. Other post-award audits include truth-in-negotiations compliance, cost-accounting compliance, audits for contract changes, and even labor floor check audits.
All SBIR/STTR grant recipients who expend more than $ 750,000 within a year are subject to a Uniform Guidance Audit (UGA). This audit is designed to verify that you are spending your grant money as proposed and that you have adequate internal controls in place. The audit will scrutinize your accounting system, how it works, and how you account for expenses.
An accounting system compliant with the Federal Acquisition Regulation (FAR)
A profit & loss statement by job showing totals for each project category
Accuracy of direct costs including labor, consulting, subcontractors, travel, and equipment
An auditor will also want to see how your costs relate to your award, who authorized each purchase and payment, how you coded each expense into your accounting records, and more.
It’s also normal for an auditor to ask questions related to fraud. You’re not being accused of fraud. It’s part of their job to use your answers to determine whether or not there is a potential for fraud.
Be prepared to hire your own UGA auditor; the government won’t cover it.
Get a FAR-compliant accounting system firmly in place
A short course on accounting and finance on the SBIT/STTR website will take you through the requirements of an FAR-approved accounting system. Since the SBIR and STTR awards contain multiple phases, each phase granting significantly more money, you’ll be held to higher standards as you progress. For example, in Phase II, you need an in-depth, detailed accounting system that keeps track of all costs and distinguishes those costs per project.
Avoid basic mistakes
SBIR accounting isn’t easy, and you can’t get away with half-hearted systems no matter how long you’ve been using those systems in your business. Here are a few words of advice.
Don’t rely on spreadsheets. You might be addicted to using Excel spreadsheets, but they’re extremely limited in terms of manipulating data. For instance, you can’t use a spreadsheet to generate internal financial information for your tax returns. Your accountant will have to spend even more time configuring your raw data. Excel just doesn’t meet the government’s requirements.
Use a proper accounting system, even when you have a fixed contract. Just because your contract is fixed doesn’t mean future work will be at fixed prices. If anything changes, you’ll regret not having a proper accounting system.
Use a payroll service. It’s difficult, if not impossible, to have a proper accounting system without a payroll service. A payroll service makes sure employee tax withholdings are deposited on time, employment taxes are paid, paychecks are classified correctly, and W2s are filed on time.
Make sure employees sign off on timesheet changes. Any time a change needs to be made to an employee’s timesheet, the employee needs to make the changes, initial it, and provide an explanation. Only the employee is allowed to do this. Adequate timekeeping is a best practice in SBIR accounting.
You won’t fear an audit when you’re prepared
It’s too easy to make mistakes without realizing it. However, when you plan ahead, there’s no reason to fear an audit. Connecting with a professional to help you establish your accounting system is the best step you can take.
Join our webinar series on the SAP S/4HANA Movement program and learn more about the different deployment options and available tools, services or assets, that lead your migration project to success.
New standards for reporting the financial impact of leases will require public companies to change their accounting practices by the end of 2019 and private companies to do so by the end of 2020. That might seem like a minor consideration at first, but most companies lease some assets. The transition can be tricky and the impact on balance sheets promises to be significant.
Today, the SEC estimates more than $ 2 trillion in lease-related expenditures and liabilities were left off balance sheets in 2018. The implosions of Enron, Tyco and WorldCom in the early 2000s inspired the new standards. Each of those companies used leasing agreements to hide massive financial and operating liabilities, and each used its distorted balance sheets to misrepresent its strength to auditors and investors while committing serious financial crimes whose exposure drove them out of business and many of their executives into prison.
FASB and international standards agencies jointly developed the new standards; as ASC 842 in the U.S. and IFRS 16 internationally, the standards are largely identical and address the same goal: getting lease information back onto companies’ balance sheets.
This represents a huge change for just about every accountant working today: The old standards were first adopted in 1966 and last revised in 1976. Chris Miller, a distinguished solution specialist and one of Oracle NetSuite’s experts on the new leasing standards, put together a hugely informative hour-long webinar to walk us through the changes and what they mean in practical terms for companies of all sizes.
The webinar is well worth a full viewing, but for now, here are three key takeaways:
Lease Accounting Has Impacts Beyond the Balance Sheet
Meeting the new standards will do more than affect the sort of balance-sheet information published in the annual report. It will require the participation of companies’ tax experts and real estate departments to supply needed data and IT to render it. Speaking of IT, most ERP systems aren’t prepared for the demands of ASC 842, so new software might be necessary. (More on that later.)
Bringing new liabilities onto the balance sheet also makes reporting more complex and may have broader financial and legal implications. Companies will want to review their debt covenants with banks, to ensure that key ratios aren’t thrown suddenly into dangerous territory. And all contracts should be reviewed for the presence of embedded leases, which merges with the new revenue recognition standard.
Get Your Implementation Plan Together Now
Miller walks viewers through a comprehensive lease-accounting framework that details the specific changes to journal entries and formal balance sheets. Each lease’s discount rate figures heavily here: Companies have a bit of leeway in how they value the asset underlying each lease, and the resulting discount rate can affect a company’s reported leverage, interest cover, asset turnover and operating profits/earnings.
Miller also works through Day one and Day two accounting measures, demonstrating how lease liability and right-of-use asset calculations combine to present a complete picture of a company’s lease obligations.
Make Sure That Your Software Meets the Challenge
Some of the new standards’ demands can be met using a combination of legacy software and hard work. Others simply can’t. The disclosure requirements imposed by the new standards, for example, result in simple demonstrations of a company’s future obligations and the operating leverage represented by its leases, but those simple expressions draw on such a complex array of data that most existing systems simply can’t be made to provide expedient answers.
Excel might be enough to do the trick, at companies with solid programmers on hand. More readymade solutions exist in products like NetSuite Fixed Assets and third-party solutions built on the NetSuite platform, such as NetLease by Netgain.
In any event, the new standards require a wide-ranging response—Miller offers a six-point transition plan—backed by software that’s up to the job. If you’re interested in learning more, please click hereto view our on-demand webinar, Lease Accounting 101 – A Roadmap to ASC 842 & IFRS 16.
Posted on Wed, July 17, 2019
by NetSuite filed under
Posted by Suzanne Myerson, Public Relations, Oracle NetSuite JAPAC
For business owners in Asia Pacific, there are a few common refrains when it comes to their software systems.
“Our inventory system is very manual – there is a lot of duplication with data entry.”
“We use a basic accounting package for cash/POS transactions and our CRM is totally disconnected from our other systems.”
“It takes us ages to pull financial operational reports to assess our performance.”
If you rely on a basic accounting package to run your business, now might be the time to consider other options, such as moving the processes that are key to your business operations to an integrated system like ERP (Enterprise Resource Processing) that will give you complete visibility into every aspect of your business.
The challenges for a fast-growing business can be diverse. G2, an online review platform with more than 650,000 independent and authenticated user reviews read by more than 3 million users each month, recently demonstrated that fast-growing businesses face many of the same challenges as their enterprise counterparts. In the report, The Power of a Cloud ERP Suite, G2 identifies supporting growth and improving productivity and efficiency while lowering costs as the key challenges. No surprises here.
Yet, many businesses in Asia Pacific continue to rely on basic accounting packages to manage business operations. In fact, smaller and midsized businesses often rely on a patchwork of standalone software silos and spreadsheets to solve their immediate business needs, according to the G2 report. As the business and its complexity grows, these disparate systems create operational inefficiencies that can have a negative impact on the bottom line, hurt the customer experience and impede the company’s ability to reach its full potential.
What are the signs that your business has outgrown its accounting package?
Limited configuration capability – The limited functionality of a dedicated accounting package means that it will be unable to deliver robust financial management requirements such as consolidation, support for multiple forms of depreciation, budget roll-ups, subscription billing or credit limits, to name a few. If you cannot fulfil these tasks with ease, your accounting software is restricting your flexibility and growth.
Limited visibility to make informed decisions – As business models become more complex, owners often need customised reports by role and quality data to deliver fact-based analysis and insights. As the gap between the reporting that is provided and the insights required grows, the business turns to spreadsheets and other workaround tools. How long can your business survive without accurate and insightful reporting?
Spending too much time to keep the system running – Growth across transactions, departments, supply chain, other channels and customers can strain an accounting platform to the point where performance is degraded, or workarounds are designed to circumvent its limitations. Are you spending too much time reconciling data between systems?
Inability to expand to new markets – Whether you want to open a new location, sell to intermediaries or directly to customer via an online presence, businesses need to understand and comply with the unique needs of each channel. Can your accounting software cater to these needs including support tax, financial and compliance needs? If it can’t, you may need to consider a robust financial management (ERP) solution.
Technology downtime starts risking business opportunity – It is said that time is money. What smaller businesses lack in size, they can make up for in responding to new opportunities or customer demands much faster than their enterprise counterparts. Often support is overlooked or even non-existent when it comes to basic accounting software offerings. Do you want to risk it?
If any of these signs impact your business, the time has come for you to consider your options – a platform that delivers financials, customer relationship management, inventory and warehouse management and ecommerce capabilities in a single solution.
Join fast growing businesses in Australia, Asia Pacific and across the globe by selecting a technology system that will propel you to new heights.
Posted by Christopher L. Miller, CPA, MBA, CMA, CITP || Distinguished Solution Specialist
With all the discussion and preparation of the new lease accounting standards, ASC 842/IFRS 16, the time has arrived for public companies to begin reporting their results. However, as we saw with ASC 606 last year, many companies have underestimated the effort and time required to comply with the new standards. KPMG has recently completed a study that found most companies are way behind in their lease accounting projects, but there is still time to get on track.
The new lease standard, known as ASC 842 or IFRS16, represents a joint effort of the FASB and international standard setters to create a unified standard for leasing activity. While some notable differences exist, there are several key features that all companies who have leased assets will need to understand. Those changes are:
Lessees will recognize all leases, including operating leases, with a term greater than 12 months on-balance sheet.
Key balance sheet measures and ratios may change, IT systems may need to be upgraded or modified, and accounting processes and/or internal controls will need to be revised.
Lessees can choose between two transition methods, with additional practical expedients available.
Sale-leaseback accounting is substantially changed.
Both qualitative and quantitative disclosures are expanded.
Despite past experience with ASC 606 and the sweeping changes ASC 842 represents, many companies are still unprepared. According to the KPMG survey:
Only 3% of respondents said their lease project was complete.
Among those still working on their projects, 67% said that they were not on schedule due to the challenges they were facing.
Only 44% had identified their leases and just 25% had assessed the accounting impact of ASC 842 and/or IFRS 16 on their business.
45% of companies believe they have software that can manage the process, but only 16% have developed the requirements necessary for implementation.
You may find yourself in a similar situation with lease accounting as you did with ASC 606. Whether that implementation went long, or the dates arrived sooner than expected, now is the time take action. For private companies, there is still a runway to complete projects on time and on schedule.
There are many ways to successfully transition to the new standard. The difference between them is often how long and how much will it cost? There are three vital steps to turning around your leasing setbacks.
First, make sure you have conducted an accounting impact assessment on how the standard will affect you. Many respondents have compared lease accounting to revenue recognition for its complexity and scope.
Second, resource the team correctly. Complying with lease accounting is a cross functional effort, even though it is concentrated in the accounting team for the final compliance results. For example, you can enlist the real estate team, office managers, etc. to help you find leases that require abstracting.
Lastly, address the four core challenges to implementation:
Identifying Embedded Leases
Review all of your service contracts for embedded leases. Anywhere equipment or space is being allocated, there could be a lease.
Look at your intercompany agreements to see if any of your allocations are in fact embedded leases.
Establishing an Appropriate Incremental Borrowing Rate (IBR)
If possible, take advantage of the expedients with respect to simplifying your IBR.
Conduct an analysis based on each asset to determine the appropriate rate. Remember, IBR is not the same for all assets, even in the same class.
Abstracting & Entering Leases into a System
Collect all of the documents that show the four key data elements: the commencement date, the end date, the payment and the interest rate. These are the bare minimum requirements to construct a lease for the new standards.
When selecting software, have a checklist of your company’s functional needs and focus on what you need for disclosures and existing business practices.
Integrating a Lease Accounting System into the Existing Environment
NetSuite offers a limited use lease feature in its Fixed Asset Module.
For NetSuite customers that need a complete lease accounting solution there are certified platform applications, such as NetLease fully compliant on the Lessor/Lessee side.
Take advantage of prebuilt connectors if a 3rd party solution is necessary. These would include CoStar, Visual Lease, and Trirega.
Lease accounting is a big project, especially after finishing revenue recognition last year. If you begin looking for the right software, compile your records, and conduct the proper accounting impact, your team will be ready for the new standards.
Want to learn how you compare to your peers, when it comes to preparing for the new Lease Accounting standards? Take this short survey to help determine where pain points exist as well as how the new standard will affect business priorities.
Posted on Wed, June 19, 2019
by NetSuite filed under
With a background in finance at a technology solutions company, a document publishing and delivery organization and an accounting firm for midmarket companies, Chris Whitfield joined the nonprofit organization MANA Nutrition as CFO with a strong background in for-profit accounting principles.
That background has proven valuable in the nonprofit world as well, Whitfield relayed during a session at SuiteWorld19.
“Both for-profits and nonprofits are mission-based, the missions just tend to be a little different,” he said.
For example, MANA Nutrition has structured its organization more like that of a for-profit even while it maintains a strict mission-based focus. The Charlotte, N.C.-based nonprofit manufactures nutrient-rich milk suspended in peanut butter, a ready-to-use therapeutic food (RUTF) used to treat severe acute malnutrition, producing about 500,000 meals per day. As a manufacturer, it may seem to have more in common with for profits than nonprofits focused on services or curing diseases, but that’s not really the case, according to Whitfield.
“MANA is a mission-based organization,” he said. “Our mission is to save kids’ lives and have a meaningful impact on reducing the lives lost from severe and acute malnutrition.”
But for-profits and nonprofits have a lot more in common than one might assume, Whitfield assured the audience. Both have a mission, it’s just that for-profits’ mission is profit. Both have a similar organizational structure: an executive director and organizational leadership in the case of nonprofits and CEOs and senior leadership in the case of for-profits. And, both largely operate under the same GAAP principles, aside from a few exceptions, and work under the same fundamentals of accounting and internal controls.
“For-profit stakeholders are investors, and there’s nothing wrong with that. I’m a big believer in capitalism,” Whitfield said. “Nonprofits tend to be service focused. At MANA we have a view that our shareholders, who receive our dividends, are the kids we serve. We like to think of ourselves as having capital. We have benefactors who say, ‘I’m ready to invest in your business.’ Their return is not a financial return, it’s the dividends we give to kids.”
Those similarities, among others, offer finance professionals in nonprofits an opportunity to apply more for-profit principles to their organizations. For example, where a for-profit might focus on reducing costs to improve margins, MANA has reduced the cost of a case of RUTF from $ 60 when it first started to $ 38, allowing it to sell to aid organizations in greater volume at a lower price, increasing its impact.
Financial Statements
There are similarities in financial statements, according to Whitfield. One might be a statement of financial position (nonprofit) and another might be a balance sheet (for profit), but they’re essentially both balance sheets. While nonprofits consider their net financial position to be a derivative of total assets minus liabilities, for-profits view the balance sheet are the cornerstone of internal control wherein total assets must equal total liabilities plus equity (that is, net assets).
“I think it’s an important and subtle difference, but nonprofits should take a look at what their equity position is,” he said.
Nonprofits can take a lead from for-profits when it comes to reporting on financials. Typically, nonprofits are focused on reporting to external constituents, whether it’s a board or donors or maybe outside agencies or creditors.
“Creditors, while they want to see external audited reports, are just as interested in internal reports that measure the success of your organization,” Whitfield said. “At MANA, we don’t report a statement of activities, we report a balance statement and income statement, but also a monthly analysis, KPIs in production, etc. That’s been valuable with creditors.”
Revenue Recognition, Subscription Models and Promises to Give
Nonprofits can also benefit from following the for-profit world when it comes to revenue recognition and subscription models. All over the for-profit world businesses are adding subscription models whether it be ongoing maintenance contracts or meal delivery kits. For nonprofits, pledges, or promises to give, can be treated similarly. Typically, a nonprofit will book the pledge as a receivable with installments paid against it. That needn’t be the case for internal reporting.
“When I have unconditional promises to give that extend over one year, I approach it like a subscription model,” he said. “We record it as a pledge receivable but instead of income we take deferred revenue and recognize it when conditions of the pledge are met, whether that condition is event-based or time-based.”
Whitfield added, “however, we of course have to restate pledges to meet the requirements of GAAP for external reporting in our audited financial statements.”
Whitfield concluded by summarizing, “Nonprofit organizations typically have a very different mission-based focus from for-profit companies, but many underlying financial management considerations are the same. The financial function in nonprofits must be focused on meeting the reporting requirements of its internal constituents, on establishing and maintaining strong systems of internal control, and on maintaining a healthy organization that has the financial fortitude to carry out its mission.”
Posted on Tue, June 11, 2019
by NetSuite filed under