Optimizing Financial Operations in HealthTech with Sage Intacct: A Comprehensive Guide

Optimizing Financial Operations in HealthTech with Sage Intacct: A Comprehensive Guide

by | Nov 7, 2024 | Accounting

The constant shifts in the HealthTech industry are driven by a few things: advancements in digital health solutions, the adoption of telemedicine, and developments in personalized care technologies.

And as these companies grow and evolve, so do their financial management needs. These companies must have effective financial operations—to sustain growth, ensure compliance, and keep driving innovation. Sage Intacct’s platform offers businesses some distinct advantages when it comes to financial management, scalability, and operational efficiency. Learn more about how this platform can work for your business.

Challenges in HealthTech Financial Management

HealthTech companies face unique challenges. To maintain solid financial oversight, these companies need robust financial systems that can handle their complex dynamics.

Rapid Growth and Scaling Issues

Many HealthTech companies experience rapid growth, which leads to challenges in scaling their financial operations. And if your company can’t scale effectively, you may find yourself spinning your wheels when it comes to expanding your business or innovating new products.

Multi-Entity and Multi-Location Complexities

Financial management is far more complex when a company operates across multiple entities and locations. Without the right financial tools, consolidating financial data, ensuring consistent reporting standards, and maintaining control over decentralized operations can overwhelm your team.

Regulatory Compliance

The healthcare sector is one of the most regulated industries in the United States. Because of this, HealthTech companies have to comply with a wide range of regulatory requirements, from HIPAA for patient data protection to FDA for wearable health tech.

Companies need systems with robust security and compliance features to make sure they avoid violating state or federal law while effectively managing their financial operations.

Need for Real-Time Financial Insights

In the fast-paced HealthTech industry, having financial insights at your fingertips is critical. Organizations need current information to make informed decisions, identify trends, and respond quickly to market changes. Being able to access an instant snapshot of your business finances can also help you pivot to meet operational challenges.

Sage Intacct: A Comprehensive Solution for HealthTech

Sage Intacct is designed to meet the healthcare industry’s unique needs. It features comprehensive financial management tools specifically tailored to healthcare providers and HealthTech companies. Sage Intacct’s features help companies manage their financial complexities and provide the insights needed for strategic planning and growth.

HIPAA Compliance and Data Security Measures

Sage Intacct lets companies manage their financial data in compliance with HIPAA regulations. This means robust security measures that protect sensitive information from unauthorized disclosure. These types of measures are crucial for both maintaining client trust and also ensuring your company complies with all applicable state and federal regulations.

Integration Capabilities with Other Healthcare Systems

Sage Intacct seamlessly integrates with various healthcare systems. This allows for unified data management across both clinical and financial operations. By integrating both sides of the equation, Sage Intacct ensures that all financial data is accurately reflected in real time.

Sage Intacct’s Key Features for Optimizing Financial Operations

Multi-Dimensional General Ledger

This platform’s multi-dimensional general ledger allows HealthTech companies to track and report financial data including locations, departments, and projects. This gives a comprehensive view of financial performance. It also lets companies drill down into the details to analyze patterns.

Automated Workflows for AP, AR, and Cash Management

The benefits of automating accounts payable, accounts receivable, and cash management processes can’t be overstated. This automation reduces manual work, minimizes errors, and accelerates transaction processing.

Sage Intacct’s automated workflows streamline financial operations, improving efficiency and accuracy.

Advanced Reporting and Dashboarding Capabilities

Sage Intacct offers advanced reporting tools and customizable dashboards that give companies real-time insights into their financial performance. These tools let HealthTech companies monitor key performance indicators (KPIs), generate detailed financial reports, and make data-driven decisions.

Multi-Entity Consolidation and Management

Managing multiple entities is made simple with Sage Intacct’s multi-entity consolidation capabilities. The platform allows for centralized financial management and reporting, ensuring consistency and accuracy across all entities.

Leveraging Sage Intacct for Strategic Decision Making

Real-Time KPI Tracking and Analysis

With Sage Intacct, HealthTech companies can track and analyze healthcare financial KPIs in real time. This gives valuable insights into financial health and operational performance, enabling proactive management and timely decision-making.

Customizable Dashboards for Different Stakeholders

Sage Intacct’s customizable dashboards provide views and insights tailored to each stakeholder. Executives, financial managers, and operational leaders can all access the specific information they need to make the most informed decisions.

Predictive Analytics and Forecasting Capabilities

Predictive analytics and forecasting tools in Sage Intacct help companies anticipate future financial needs, identify trends, and plan strategically. HealthTech companies need these crucial capabilities for budgeting, financial planning, and managing growth.

Case Studies: HealthTech Success Stories with Sage Intacct

Sage Intacct has already helped hundreds of healthcare and HealthTech companies improve their financial process efficiency, save costs, and increase return on investment. The platform’s automation and efficiency improvements reduce operational costs, while advanced financial insights support better resource allocation and financial planning.

Improved Efficiency in Financial Processes

HealthTech companies using Sage Intacct have reported major improvements in their financial process efficiency. Automated workflows and real-time reporting reduce the time these companies must spend on manual tasks. This allows financial teams to focus on strategic planning instead.

One of these companies is Paige.ai, a digital pathology innovator that uses generative AI to improve health outcomes. Paige.ai needed some foundational elements to attract more investors, support sustainable growth, and eventually launch an IPO. QuickBooks wasn’t doing the trick, but company leaders were concerned about the lost productivity that’s often inherent when switching to a new system.

Leaders were pleased with Sage Intacct’s implementation progress, reporting their milestones were reached at or ahead of schedule—and that Sage’s user interface “was the most intuitive and easy to navigate straight off the bat.” Paige.ai is using Sage Intacct’s API to integrate with the world’s most popular accounts payable software, freeing up its finance personnel to work on more value-added tasks.

Learn how Lavoie CPA can enhance your financial process efficiency with Sage Intacct.

Cost Savings and ROI Achievements

Implementing Sage Intacct has led to substantial cost savings and return on investment (ROI) for HealthTech companies. The platform’s automation and efficiency improvements reduce operational costs, while advanced financial insights support better resource allocation and financial planning.

Many healthcare accounting teams are focusing on making their core accounting activities (like closing the books) as efficient and automated as possible. Growing companies need their finance teams to think nimbly, and this means reducing the amount of time spent on data-entry types of tasks with finance outsourcing.

Sage Intacct’s Close the Books Survey talks to more than 1,400 finance and accounting professionals across 60+ industries. This survey showed that Sage Intacct’s healthcare customers could close their books in less than 25 percent of the time taken by non-Sage Intacct users. One of the companies surveyed, Personal Healthcare LLC, reduced its monthly close from one week to one day.

Find out how Lavoie CPA can help you achieve significant cost savings and ROI with Sage Intacct.

Implementation Best Practices

Assess Your Organization’s Needs

Before implementing Sage Intacct, HealthTech companies should assess their specific financial management needs and objectives. This helps select the right features and configurations to meet your organization’s requirements.

Plan for Seamless Integration

A well-planned integration strategy will let you seamlessly integrate Sage Intacct with your existing healthcare systems. This involves mapping out data flows, identifying integration points, and ensuring data consistency across platforms.

Training and Change Management Strategies

Successful implementation depends on effective training and change management strategies. HealthTech companies should invest in comprehensive training programs for staff and develop change management plans to ensure a smooth adoption of the new system.

Future-Proofing HealthTech Finances with Sage Intacct

Scalability for Growing Organizations

Sage Intacct’s scalable architecture supports growth. As organizations expand, the platform continues to accommodate increased transaction volumes, additional entities, and new locations without compromising performance.

Adapting to Evolving Healthcare Regulations

Sage Intacct is designed to adapt to evolving healthcare regulations to ensure continued compliance. Regular updates and enhancements keep the platform aligned with regulatory changes.

Continuous Innovation and Updates

Sage Intacct is constantly innovating and updating its platform to incorporate the latest financial management technologies and practices. HealthTech companies benefit from these updates by staying at the forefront of financial management innovation.

In Closing

Optimizing financial operations is crucial for HealthTech companies to navigate the industry’s complexities, ensure compliance, and drive growth. If you’re looking to enhance your financial processes, partnering with Lavoie CPA could be a great fit. Our team has unique expertise in leveraging Sage Intacct to address the financial challenges experienced by the health technology sector. Start the conversation with us today to learn how we can help you optimize your financial operations and drive growth.

Managing Multiple Entities: A Guide to Effective Accounting

Managing Multiple Entities: A Guide to Effective Accounting

by | Apr 26, 2023 | Accounting

Businesses struggle with numbers all the time, and for multiple-entity businesses, this struggle is complicated as there are lots of financial statements to consolidate. This article will serve as a guide to help you learn the challenges of multi-entity accounting, the benefits, and the best practices for outsourced multi-entity accounting.

Multi-entity accounting is defined as the consolidation of the financial statements of the different entities of a business. It involves analyzing the finances of every division or part of a business to produce a general statement that gives insights into the financial aspect of a business.

Multi-entity accounting is more than maintaining financial records which is similar to bookkeeping.

An example of a multi-entity business is Meta, owned by entrepreneur Mark Zuckerberg which comprises entities like Facebook and Instagram.

Another example of a multi-entity business is Microsoft as it has branches across America, Europe, Asia, and Africa. Each of the branches in these regions is an entity.

Importance of Multi-Entity Accounting for Organizations

Multi-entity accounting enables a business to focus on its core processes and be able to make informed decisions about them. This is because the accurate financial data of each entity helps businesses to streamline their financing and accounting operations as a whole to be able to expand and maximize profit.

Outsourcing multi-entity accounting simply involves allowing an experienced third-party firm to handle all multi-entity operations.

Benefits of Outsourced Multi-Entity Accounting

Access to Professional Accounting Services: outsourcing multi-entity accounting provides access to high-quality services since the team is usually comprised of subject matter professionals dedicated to balancing finances and helping a business grow.

Reduced Operational Costs Compared to Hiring In-house Accountants: This is a no-brainer as hiring an in-house team means more expenses for the business which can include remuneration, training, and equipment. Outsourcing accounting can save as much as 50% on accounting costs.

Scalable Accounting Solutions: Outsourcing accounting provides a business with the room to easily scale for expansion. This means the expansion of a business doesn’t affect the quality of service, unlike in-house where more team members will need to be hired to manage operations.

Enhanced Financial Reporting and Transparency: With outsourced multi-entity accounting, there’s more financial transparency as financial data is more consolidated and consistent. This means there are readily available multiple reports that can be compared side by side which are also readily available. It is essential to be able to show complete and accurate financial reports for transparency and enhanced quick decision-making, especially for investment opportunities that can help the business.

Streamlining Workflows and Processes: Outsourced multi-entity accounting helps a business streamline its work and be able to focus on other aspects of the business such as gaining more visibility, seeking expansion opportunities, and attracting and retaining customers They also find areas to improve internal controls during a financial audit or automate specific processes to be more streamlined.

Improved Government Compliance: Outsourced multi-entity accounting can identify non-compliance areas with Internal Revenue Service regulations. They can pinpoint exactly where compliance efforts are lacking which an internal team may not be privy to, thereby improving financial compliance with the government.

Fraud Prevention: outsourced multi accounting ensures a proper vetting of financial statements. The extensive examination and audits of the account by an experienced third party provide a common ground for assessing financial health and detecting fraud which prevents the business from taking a significant loss.

Challenges of Multi-Entity Accounting

Managing Financial Data for Multiple Entities: It can be difficult to manage financial data, especially for businesses that have a large number of entities. This is because each entity has to be treated as a separate legal establishment and the data has to be tracked. This can be hard for many businesses to manage.

Accurate Financial Information: The higher the number of entities the more difficult it becomes to report financial information accurately and consistently. This can cause errors and reduce the accuracy of the collected data which can hurt business finance.

Ensuring Compliance with Different Accounting Regulations: Multi-entity considerations require balance across the financial statements of the entities. Regulations such as different currencies, tax laws, and accounting standards especially for businesses with international or interstate entities can make compliance difficult to achieve.

Balancing Autonomy and Control of Entities: Multi-entity accounting can make it difficult for autonomy to be balanced as the entities are treated as separate businesses and independent of others. If this is not properly managed, it can cause a business to lose control of its entities and decline in team/work culture.

Best Practices for Outsourced Multi-Entity Accounting

Choosing a Reputable and Experienced Accounting Firm: It is important to choose a reputable firm to prevent data compromise and ensure top-notch service. To be able to choose a reputable firm, study their customer reviews, testimonials, and case studies to make sure you’re entrusting your business to safe hands. This accounting for start-ups guide details everything about partnering with an outsourced firm.

Establish Clear Communication Channels with the Accounting Provider: For any business relationship to thrive, there has to be clarity on goals, objectives, and mission. It is ideal to have similar values on business ethics as this ensures compliance with set rules. Establishing clear communication channels also saves time as both parties communicate on the required channels at required times removing unnecessary back and forth.

Developing a Customized Accounting Plan for Each Entity: Both the service provider and the company need to have a customized accounting plan as the foundation for all operations. This makes it easy to trace accounts and check for accuracy. If accounting plans are constantly being changed, it makes it difficult to monitor accounts and detect errors on time. Hence, it’s necessary to consider the flexibility of the firm to adjust to the customized plan and eliminate friction.

Regularly Reviewing and Analyzing Financial Reports: A single oversight can be detrimental to a business hence, reviews should be done as often as required. This is to incorporate changes and trends in the industry for keeping financial records up-to-date according to standards.

Leveraging Cloud-Based Technology and Tools: Modern-day accounting is constantly improving as it’s mostly software based. A good firm should have a good understanding of software competency as they have access to newer and more effective technology. The use of cutting-edge accounting software for operations improves accuracy and work quality.

Conclusion

It has become imperative for multi-entity accounting to be employed by medium-sized and large-scale businesses. Not just for improving workflows and promoting financial transparency, multi-entity accounting provides but for even more room for a growing business to expand.

Outsourcing multi-entity accounting helps to mitigate challenges such as the accuracy of financial reports and ensuring compliance. However, not just any outsourcing firm can be trusted to perform effectively. And following the best practices may simply not be enough to meet your desired target. Such a process should be left in the hands of specialists who understand the impact of business financial health.

Bookkeeping vs Accounting: Differences & Benefits

Bookkeeping vs Accounting: Differences & Benefits

by | Mar 24, 2023 | Accounting

As a business owner, managing finances and staying on top of financial obligations is crucial for success. To achieve this, businesses need two important financial services: bookkeeping and accounting. In this blog, we will explore the differences between bookkeeping and accounting services and discuss how each service can benefit businesses.

What is Bookkeeping?

Bookkeeping is the process of recording, organizing, and maintaining financial transactions. A bookkeeper is responsible for managing accounts payable and accounts receivable, reconciling bank statements, and preparing financial reports.

There are two types of bookkeeping systems: single-entry and double-entry. Single-entry bookkeeping is a simple system where each financial transaction is recorded once, either as income or expense. Double-entry bookkeeping is a more complex system where each transaction is recorded twice, once as a debit and once as a credit, ensuring that the books are always balanced.

What is Accounting?

Accounting is the process of analyzing, interpreting, and summarizing financial data. An accountant is responsible for preparing financial statements, analyzing financial data, providing tax advice and planning, and performing financial audits. There are different types of accounting services, including financial accounting, managerial accounting, tax accounting, and auditing.

Bookkeeping vs. Accounting

While bookkeeping and accounting are both essential financial services for businesses, there are key differences between the two. Bookkeeping is focused on recording and maintaining financial transactions, while accounting involves analyzing and interpreting financial data. Bookkeeping is typically more transactional and repetitive, while accounting is more analytical and focused on providing insights to help businesses make decisions.

Bookkeeping Services

Bookkeeping services include maintaining financial records, managing accounts payable and accounts receivable, and preparing financial reports. For small and medium-sized businesses, bookkeeping services can be especially helpful as they allow business owners to focus on running their business instead of spending time on financial record-keeping. Bookkeeping services can also provide insights into financial trends and identify areas where businesses can improve.

Accounting Services

Accounting services include tax preparation and planning, financial analysis, and audit support. Larger businesses may require accounting services to help with complex tax issues, financial analysis, and audit preparation. Accounting services can also help businesses make informed financial decisions, reduce tax liability, and improve overall financial performance.

Bookkeeping and Accounting for Healthcare

For healthcare businesses, like any other type of business, bookkeeping and accounting services are essential to ensure financial stability, compliance with regulations, and strategic decision-making. However, there are specific considerations for healthcare businesses when it comes to these services.

Bookkeeping services for healthcare businesses typically include the management of accounts payable and accounts receivable, payroll processing, financial statement preparation, and tax preparation. Bookkeepers in the healthcare industry must have knowledge of industry-specific regulations, such as HIPAA, and be able to manage financial data related to patient care, insurance claims, and reimbursements.

Accounting services for healthcare businesses involve more advanced financial analysis and strategic planning. These services include financial statement analysis, budgeting, forecasting, tax planning, and audit support. Accountants in the healthcare industry must have knowledge of healthcare regulations, such as the Affordable Care Act, and be able to analyze complex financial data related to patient care costs, insurance claims, and reimbursements.

One key consideration for healthcare businesses when it comes to bookkeeping and accounting services is the need for accurate and detailed financial records. Healthcare businesses must comply with strict regulations related to patient privacy and data security, so it is important that financial records are managed in a secure and confidential manner. Additionally, healthcare businesses must be able to track and report on patient care costs accurately to comply with regulations and ensure financial stability.

Another consideration for healthcare businesses is the need for specialized knowledge and experience when it comes to financial management. Healthcare regulations and industry-specific financial practices can be complex, so it is important to work with bookkeepers and accountants who have experience in the healthcare industry and understand the unique financial needs of healthcare businesses.

Bookkeeping and Accounting for SaaS

For SaaS businesses, bookkeeping and accounting services are just as important as they are for any other type of business. SaaS companies deal with a unique set of financial challenges that require specialized experience and knowledge.

Bookkeeping services for SaaS businesses include maintaining accurate financial records, managing accounts payable and receivable, and preparing financial reports. Since SaaS businesses often operate on a subscription-based model, bookkeepers need to be able to track recurring revenue and monitor changes in subscription levels. Additionally, bookkeepers may need to manage revenue recognition for SaaS businesses, which can be complex due to the nature of subscription-based revenue.

Accounting services for SaaS businesses can include tax planning and preparation, financial analysis, and audit support. SaaS businesses may have unique tax considerations, such as sales tax compliance across multiple states. Additionally, financial analysis can help SaaS businesses identify trends in customer behavior and usage, which can inform product development and pricing strategies. Audit support can also be important for SaaS businesses seeking to raise capital or undergo a merger or acquisition.

When choosing a bookkeeping or accounting service provider for a SaaS business, it is important to consider their experience and understanding of the unique challenges facing SaaS businesses. Look for a provider who has experience working with SaaS businesses of a similar size and complexity. Additionally, it can be helpful to choose a provider who uses up-to-date technology and software to streamline processes and improve accuracy.

Bookkeeping and Accounting for Private Equity and Venture Capital

Bookkeeping and accounting services play a crucial role in the success of private equity and venture capital businesses. These businesses face unique financial challenges that require the proficiency of experienced professionals to manage their financial operations effectively.

Bookkeeping services for private equity and venture capital businesses involve maintaining accurate records of financial transactions, managing cash flow, and preparing financial statements. These services help businesses keep track of their financial performance, identify potential risks, and make informed decisions.

In addition to basic bookkeeping services, private equity and venture capital businesses may require more advanced accounting services, such as tax planning and compliance, financial analysis, and audit support. These services help businesses manage complex financial issues, reduce their tax liability, and make informed investment decisions.

One area where accounting services for private equity and venture capital businesses are particularly important is in managing their investment portfolios. These businesses typically invest in a wide range of companies and assets, which can create complex accounting and reporting requirements. Accounting professionals can help businesses manage these requirements, including tracking investment performance, valuing assets, and preparing financial reports for investors.

Another important area where accounting services are essential for private equity and venture capital businesses is in managing their fundraising activities. These businesses often rely on raising capital from investors to fund their operations, which requires careful financial planning and reporting. Accounting professionals can help businesses develop and implement effective fundraising strategies, prepare financial projections and forecasts, and provide guidance on how to meet investor reporting requirements.

Choosing a Bookkeeper or Accountant

By outsourcing your financial operations to a trusted service provider, you can achieve greater success and focus on growing your business. Once you have decided whether your business needs bookkeeping or accounting services, it is important to choose the right service provider. Factors to consider:

Cost: Bookkeeping and accounting services can vary greatly in cost, depending on the provider, the level of service, and the complexity of your business. It is important to choose a provider that fits within your budget, but also provides the necessary level of service.

Experience: Look for a provider with experience in your industry, as well as with businesses of a similar size and complexity. You want a provider who understands the unique challenges and needs of your business.

Availability: It is important to choose a provider who is available when you need them, whether it be for monthly bookkeeping tasks or year-end tax preparation. Consider their response time and availability during peak periods, such as tax season.

Technology: Technology has become increasingly important in the world of bookkeeping and accounting. Look for a provider who uses up-to-date technology and accounting software to streamline processes and improve accuracy.

Referrals and reviews: Ask for referrals from other business owners or professionals, and read online reviews to get a sense of a provider’s reputation and level of service.

Communication: Choose a provider who communicates clearly and regularly with you, and who is willing to explain financial concepts in a way that you can understand.

Tips for Selecting a Service Provider

You should schedule an initial consultation to discuss your business needs and ask questions about their services.

Ask for references and follow up with those references to gauge their level of satisfaction.  Look for certifications and affiliations with professional organizations, such as the American Institute of Certified Public Accountants or the National Association of Certified Bookkeepers.  Request a detailed proposal or engagement letter outlining the scope of services, fees, and terms of the engagement.

Both bookkeeping and accounting services are essential for businesses of all sizes. By outsourcing your financial operations to a trusted service provider, you can achieve greater success and focus on growing your business. Contact us today to learn more about bookkeeping and accounting services.

Bookkeeping and Accounting FAQs

Q: Are bookkeeping services necessary for all businesses?

A: Yes, bookkeeping services are essential for all businesses, regardless of their size or industry.

Q: Are accounting services necessary for all businesses?

A: Accounting services are typically more necessary for larger businesses with more complex financial needs.

Q: Can outsourcing bookkeeping or accounting services save businesses time and money?

A: Yes, outsourcing bookkeeping or accounting services can save businesses time and money by allowing them to focus on running their business instead of spending time on financial record-keeping, and by providing insights into financial trends and identifying areas where businesses can improve.

Guide for Start-Ups Looking to Partner With an Outsourced Accounting Firm

Guide for Start-Ups Looking to Partner With an Outsourced Accounting Firm

by | Feb 23, 2023 | Accounting, Startups

For investor-backed companies, like start-ups, an outsourced accounting firm, also known as a financial operations management and outsourced accounting firm, offers many benefits that allow start-ups to scale, save time, and reduce operational costs and risk. Learn how to leverage a financial partner to help you and your team keep up with the demands of expansion, regulators, and investors.

What is Outsourced Accounting?

An outsourced accounting firm is a professional firm that provides financial services to client businesses. These firms are hired to provide specific services like cost reduction, financial reporting, payroll processing, and system and process assessments. An outsourced accounting firm can provide more comprehensive and reliable services than an in-house accounting team.

Common functions that investment-backed companies outsource include:

  • Bookkeeping
  • Managerial accounting
  • Tax accounting
  • Financial Audits
  • Controller services
  • Outsourced CFO services
  • Financial analysis
  • Payroll services
  • Compliance
  • Human resources

How Investor-Backed Companies Can Benefit from Outsourced Accounting

In the early stages of development, start-ups don’t usually have an established or consistent revenue stream, making growth and long-term financial stability essential goals.

As start-ups do grow, they need the right financial infrastructure in place to handle the rising cash flow, regulation requirements, and overhead costs.

This is where an outsourced accounting firm can deliver immediate value by offering these benefits:

Build Trust With Investors

Outsourcing accounting services can be a smart move for start-ups looking to impress their investors. By working with a reputable accounting team, start-ups can demonstrate to investors that they are serious about their financial management and have taken steps to ensure accuracy and financial transparency.

Additionally, an experienced accounting team can provide valuable insights and recommendations that can help start-ups make informed financial decisions and optimize their cash flow. All of these factors can contribute to a more positive perception of the start-up by investors, increasing the chances of securing funding and building long-term partnerships.

Access to Specialists Without Overhead

No one in business disputes the value of a quality CFO, but affording one with a start-up budget can put this essential role out of reach. Outsourced accounting firms make industry-leading proficiency financially accessible. Trust our knowledgeable outsourced CFO professionals, who possess industry-specific insights and a wealth of experience, to guide your financial decision-making.

They bring a level of experience to the table that start-ups may not have in-house or cannot afford to bring in-house. By leveraging the knowledge and skills of an external accounting team, start-ups can ensure that their financial management is accurate, compliant, and up-to-date without diverting internal resources away from core business activities.

Improve Internal Controls

Without a CFO in place, investor-backed businesses have no one to spot signs of fraud, like unusual transactional or billing activity. This puts companies at greater risk, which can be eliminated with an outsourced accounting partner.

Enhanced Data Security

Financial operations management firms protect business data with encrypted cybersecurity programs. This can be a real point of confidence for a start-up’s investors and employees, knowing that personal customer or employee information is safe.

Flexibility to Scale

A good outsourced accounting firm will tailor its services to meet its clients’ most immediate needs. This is good news for investment-backed companies who need to stay financially lean. By outsourcing financial duties, a start-up can save money by limiting spending to critical areas only.

Start-ups only pay for the services they need. Plus, start-ups can scale and decrease services with the ebb and flow of businesses. With an in-house team, you have to pay salary and benefits regardless of the workload.

More Time For Growth

Outsourcing can also free up time and resources for start-ups and their leaders, allowing them to focus on growth strategies.

First and foremost, outsourcing allows start-ups to delegate time-consuming and complex accounting tasks to an external team of specialists, freeing up internal resources. This can be especially important for start-ups, which often have limited staff and resources.

Outsourced accounting for start-ups can also provide access to advanced accounting tools and technology that they may not be able to afford or implement in-house. This can help to streamline accounting processes, reduce errors, and increase efficiency, making growth an attainable reality for start-ups.

Advanced Services You Can Expect from an Outsourced Accounting Firm

In addition to the benefits above, a financial operations management and outsourced accounting firm can provide these added perks to your invest-backed business.

Cash Flow Management

Use your outsourced partner to run an analysis of your expenses and profit statements. With this information, your partner can plan effective strategies to deal with potential roadblocks.

Forecasting

Leverage your partner firm’s forecasting experience to map out strategies that address performance needs in the short and long term.
Growth and Exit Strategies

Let your outsourced accounting firm prepare business plans, forecasts, and other essential documents needed to raise more capital for growth.

Business Systems and Process Improvements

Who better than an outside financial specialist to advise on areas where your start-up can improve efficiencies? This includes things like month-end reporting, credit and collections, and even your business strategy to maximize returns.

Potential Cons of Partnering With an Outsourced Accounting Firm

While there can be some potential obstacles when working with a financial partner, most can be avoided with good communication up-front and by finding a firm that feels like a natural fit.

Outsourcing for the First Time

If you’re not familiar with using an outsourced accounting firm, you may not know how to fully leverage the firm’s capabilities. To avoid this, start-ups can ask potential partners to walk them through their typical work process.

Cost

While using an outsourced accounting firm can save investment-backed companies money, if not carefully managed, the partnership can cause costs to soar quickly. This can be prevented by asking potential partners for a detailed estimate and factors that would impact the price. Also, be upfront about your budget. A good financial partner will tailor a solution to match it.

Poor Communication

Bad communication can result in many of the issues above. From the start, make sure you and your outsourced accounting firm are in agreement on the process and modes of communication, as well as goals and objectives.

Bad Fit

Just as there are numerous types of investment-backed businesses, there are also numerous investment firms that specialize in niche sectors. Look for a firm that has experience with a company similar to your size, structure, and industry.

Tips to Help You Choose the Right Financial Partner

As we mentioned, many of the potential risks of hiring an outsourced accounting firm can be avoided if you’re able to find a firm that understands your culture, verticals, and goals. Here are questions and considerations that can help you find the best fit.

What Are Your Short and Long-Term Business Needs?

Start by taking into account your specific business needs to determine if they’ll be met in your partner’s tailored package.

What services or support do you need?  What type of data is being shared with external personnel, and which tasks should remain in-house because of their confidential nature? For instance, if your company requires tax accounting or bookkeeping but not payroll processing, these duties are ideal for outsourcing.

What Is Your Budget?

If you are unsure about how much it will cost to outsource your finance and accounting services, don’t fret. You can make an educated guess based on some key factors.

Ask yourself:

  • How much can my organization afford to spend on outsourced services?
  • What specific services does my organization need?
  • What value will the services bring to my organization?
  • Are the costs of an in-house team and technology stack cheaper than the cost of an outsourced team and technology stack?

Keeping these questions in mind can help you make an informed decision about the cost of outsourcing your finance and accounting services. You can also compare and contrast pricing between your top picks.

Check the Firm’s Reputation & Experience

It is important to do your research when looking for potential providers. Check out what previous customers have to say about them, and make sure they have experience in industries or with clients similar to yours.

It is important to find a financial outsourcing partner that has experience in the industry and understands the complexities of your business. Make sure to ask for references from previous or existing clients.

Ask Questions

Here are a few questions to get you started, but you’ll likely have questions specific to your business structure.

  • What experience do you have working with start-ups?
  • What accounting software do you use and what features does it have?
  • What services do you offer, and what is your pricing structure?
  • How do you ensure the accuracy and timeliness of your services?
  • How do you communicate with clients?
  • Are you familiar with any tax regulations specific to start-ups?
  • What is your experience with raising capital?
  • What other services do you offer that may be beneficial to a start-up?
  • Are you willing to provide references from other start-up clients?

Next Steps

If you’re ready to start your search for an outsourced financial partner, here are a few to-do’s to complete before you begin your search:

  1. Are you open to new and updated accounting practices?
  2. Are you willing to share access to your financial data with a partner?
  3. Is your team ready to adopt process improvements your financial partner may recommend?

Contact Lavoie

If you answered yes to the questions above, it’s time to find a partner you can trust. With the right partner, you can gain the knowledge, skills, and experience required to optimize your financials and reach the goals you have for your start-up.

Contact Lavoie today to learn how their experienced team of financial professionals can provide you with the support you need to successfully manage your finances. We have extensive experience supporting investment-backed companies.

Contact us online or by calling 704-644-0235.

Contact Lavoie

How Outsourced Accounting Benefits Your Private Equity Clients

How Outsourced Accounting Benefits Your Private Equity Clients

by | Feb 13, 2023 | Accounting, Outsourcing

Today, more than half of market private equity firms use an outsourced accounting partner, and for a good reason. Working with a financial operations management and outsourced accounting firm benefits both your firm and your clients.

Jump Ahead

In the sections below, we’ll explain how a financial planning and accounting firm can help you.

Instill Confidence in Your Investors

Investors like funding good ideas, but only if they know an experienced team will manage that good idea to its full potential.

Investors will be looking at how well your team works as individuals and as a group before trusting your firm to source, negotiate, monitor, and exit fund investments.

So, when meeting with potential investors, you want your team laser focused and ready to answer every question investors throw your way, like:

  • How forward-thinking is your team on issues that impact private equity?
  • How comfortable is the team managing a complex portfolio like mine?
  • Describe the technology you use to implement proactive portfolio strategies.
  • How quickly can the team produce high volumes of customized reports?

Your team’s biggest barriers to making a good impression?

Admin Distractions

If your team has to manage basic accounting tasks or stay on top of regulation changes, their focus will be split between essential and non-essential business functions.

An unfocused team has a greater risk of delivering reactive and lackluster strategies or accruing costly regulator penalties.

Disorganization

When your team doesn’t have a central platform to store, view, and extract financial data, it’s easy for teams to mistakenly (and unknowingly) work off of inaccurate or dated information. Without a centralized location to store client data, your team is more likely to stumble over unnecessary redundancies and inefficiencies.

By outsourcing your firm’s financial operation management and accounting, you let your fund admins focus on improving investment strategies, reports, and client dashboards – tasks that have a direct impact on the business.

Furthermore, your team will all be able to leverage accurate data, the bedrock of effective and proactive investment strategies.

Preserve Your Reputation to Attract Investors

As private equity firms grow, it gets more difficult to maintain a high growth rate. But a high growth rate is exactly what attracts investors.

In response, private equity firms are eager to find efficiencies and cost savings that don’t impact core business functions.

Outsourcing your financial and accounting processes is an excellent way for firms to reduce overhead costs while maintaining transparency and accuracy. Plus, private equity firms can still maintain management fees this way.

Additionally, you can retain a penalty-free track record by relying on your financial partner to monitor regulatory changes and how they impact your business. Plus, your financial partner can make sure your firm is always financial audit-ready.

Broaden Your Proficiency

The very best outsourced accounting firms are the ones that can explain the meaning behind the numbers.

At Lavoie, we go a step further by also identifying:

Think of a company like Lavoie as an extension of your team that you can tap when, for example, you don’t understand why cash flow is low when the business is performing. Your financial partner has both the time and experience to investigate the problem and deliver a list of actionable next steps.

Finally, there is a degree of credibility you can achieve with investors when they know that a professional team is overseeing all the nitty-gritty details of their investment. This also reassures investors that your team’s focus is on their funds.

Free Up Cash Flow to Reinvest in Teams & Tools

There is a multitude of ways to enhance the investor experience at your firm, but very few of them are free.

An important benefit of partnering with an outsourced financial operations management and accounting firm is that it can free up more cash flow. This allows you to reinvest in other things such as team training, hiring new team members, or purchasing industry-leading tools.

When private equity firms experience rapid growth, they are suddenly inundated with heavy cash flow. A partner like Lavoie ensures that you can manage those funds efficiently.

Your financial partner can also manage your accounts receivable, allowing your company to collect payments faster or identify clients who are behind with payments.

They also have the time to carefully review invoices before they’re paid to check for any inaccuracies that can cost you.

The biggest cost savings come from not having to staff an in-house accounting team. With a financial partner, you only pay for additional financial support when you need it.

Meet Expectations of Digital-Savvy Investors & Regulators

Today’s most successful firms leverage the speed and accuracy of financial software to deliver superior client experiences and abide by current regulations.

All client investors expect financial transparency and accuracy and – with the emergence of technology – they expect them at a moment’s notice.

The Securities and Exchange Commission (SEC) also expects greater transparency and accuracy. The surge in private investments, plus the fact that private companies aren’t required to file information with local regulators, drew enough attention for the SEC to tighten regulations.

Today, regulators are more likely to request a report on performance or economic activity. All signs point to more regulations, re-emphasizing the importance of accessing financial information at a moment’s notice.

Financial software could easily alleviate these issues — but the software can’t do all the work by itself. Someone from your firm has to research and select the right product, learn the tool, and train other employees.

Realistically, private investors do not have enough time to do this, but the good news is that they don’t have to. Not when they partner with a financial operations management and accounting firm.

At Lavoie, for example, we make software recommendations to our clients based on the functionalities they need. We are proficient with several programs that satisfy a range of accounting needs.

We also:

  • Set up the software for you
  • Create custom dashboards for your clients
  • Show you how to maximize the tool in ways that add value to your strategy

In Summary

Private equity firms of all sizes can glean deeper insights at a faster pace and with greater accuracy when they have the support of a financial operations management and an outsourced accounting firm.

Firms like Lavoie can reduce operational costs, streamline inefficiencies, and introduce your team to the right software. The resulting improvements in accuracy, communication, and transparency will only enhance the client experience at your firm.

If you’re a private equity firm looking for financial support, contact Lavoie today!

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What Is Driver-Based Planning and How Can It Give Your Company a Competitive Edge?

What Is Driver-Based Planning and How Can It Give Your Company a Competitive Edge?

by | Jul 6, 2022 | Accounting, Small Business

Budgeting often leaves business professionals drifting aimlessly in a sea of details.

With so much information available, they struggle to determine which factors will propel their company forward and which will sink it altogether.

Fortunately, driver-based planning can serve as a beacon.

Intuitive and flexible, this budgeting technique allows companies to identify which factors have the greatest impact on financial performance. The budget is then built around these factors, also known as key drivers.

The result? A nimble and responsive budget that eliminates white noise by focusing on variables that actually move the needle.

Keep reading for more insight into this innovative budgeting technique.

Jump Ahead

What Is Driver-Based Planning?

Traditional budgeting methods focus heavily on details that have little impact on the bottom line. Comparatively, driver-based planning focuses on key drivers that are vital to a business’s financial performance and future success. 

Though key drivers vary from industry to industry, common examples include:

  • Call volume 
  • Quantity Produced
  • Product price

With driver-based planning, organizations can create models that explore the causal relationships between key drivers and financial outcomes. These models can then be used to make operational decisions. 

Driver-Based Planning in Action

At its simplest, driver-based planning helps businesses bridge the gap between budgeting and everyday operations. 

Your company can implement this forecasting technique in four steps.

Step 1: Identify Qualitative Goals

Much like in traditional budgeting, a driver-based model begins with an understanding of what your company hopes to accomplish. 

This goal doesn’t need to be overly complicated or even very specific. It can be as simple as “drive revenue growth” or “increase profitability.”

Step 2: Establish Quantitative KPIs  

After determining your high-level qualitative goal, map out how you will measure success. For most companies, this involves establishing key performance indicators (KPIs). 

Common examples of KPIs include net profit, operational cash flow, and inventory turnover.  

Step 3: Isolate Key Drivers

Now, your company must determine which factors – or key drivers – have the greatest impact on those KPIs. 

Hundreds of variables may affect a company’s bottom line. The objective is to isolate those that matter the most. 

Step 4: Develop the Model

The last step is to create a quantitative model based on your company’s key drivers. But a successful driver-based model can take days, if not weeks, to develop in a spreadsheet. 

Fortunately, financial planning and analysis (FP&A) software can minimize legwork while delivering a more precise and accurate forecasting system.  

Selecting Key Drivers With Momentum

Driver-based planning is grounded in the Pareto Principle. 

Also known as the 80/20 Rule, the Pareto Principle states that 80% of outcomes come from 20% of causes. In layman’s terms that means your company’s financial performance hinges on a handful of inputs.  

Determining which inputs – or key drivers – are worth your attention can be challenging. However, key drivers should be easy to manipulate. In other words, your company should be able to control key drivers with a high level of accuracy. 

For example, the number of sales representatives can easily be increased or decreased. However, the sales representative attrition rate is less predictable and harder to change.

Why Businesses Are Adopting a Driver-Based Approach

An increasing number of companies are moving away from traditional models and toward the driver-based approach. 

Why? Because this innovative methodology has clear advantages over the budgeting techniques of yesteryear. 

1. Driver-based planning puts the focus on key metrics that impact organizational success.  

Traditional models adopt a bottom-up approach, forcing the C-suite to wade through irrelevant information. But with a driver-based model, businesses can drill down on the metrics that actually matter. 

2. Driver-based models allow teams to quickly assess the impact of internal or external changes. 

In a rapidly shifting economy, the ability to pivot on a dime is invaluable. Luckily, driver-based plans allow companies to manipulate variables, run different scenarios, and determine how imminent changes could impact the bottom line. 

3. Driver-based approach nurtures operational alignment. 

Driver-based models link financials to the everyday activities of your company. This encourages finance professionals to collaborate with department heads to truly understand which inputs are linked to improved performance. 

4. Driver-based models ensure data integrity. 

The sheer volume of information associated with traditional models contributes to inaccuracies. But with driver-based planning, companies can focus on collecting a small amount of accurate, valid data. 

5. Driver-based planning helps stakeholders see the big picture.   

The chief advantage of driver-based planning is simplicity. This budgeting approach allows your company to explain – in plain language – the causal relationships between key inputs and profitability to stakeholders.

How Driver-Based Financial Planning Tools Maximize Precision

Driver-based models can give companies a competitive edge by illuminating key drivers that affect the bottom line. 

However, building one of these models in a spreadsheet can be tedious, requiring days of work from even the savviest of finance professionals. Worse yet, most spreadsheets get bogged down by the macros and equations needed for these models. 

Luckily, there’s a better solution. Driver-based FP&A software can offer cutting-edge precision and customizable forecasting solutions with a single click.   

Lavoie CPA and Jirav Software Solutions

At Lavoie CPA, we are dedicated to delivering strategic support so that businesses can focus on what matters most: catalyzing growth. With this in mind, we have partnered with Jirav, a driver-based financial planning tool, to help clients soar to greatness. 

“Jirav gives business professionals the clarity needed to make their next big move.”

— Sharai Lavoie, CEO of Lavoie CPA

As our preferred FP&A software, Jirav gives you a real-time look at financial projections. Rather than build budgets from last year’s stale data, you can rely on Jirav to help you visualize the future and test out different scenarios based on key drivers. 

Contact Lavoie’s financial experts to see if Jirav is the right software solution for your business. 

Schedule a Demo