Bookkeeping vs Accounting: Differences & Benefits

Bookkeeping vs Accounting: Differences & Benefits

by | Mar 24, 2023 | Outsourced Accounting & CFO

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 | Entrepreneurs, Outsourced Accounting & CFO

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 | Entrepreneurs, Outsourced Accounting & CFO

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!

Contact Lavoie
How Monarch Doubled Revenue with Outsourced Accounting Services

How Monarch Doubled Revenue with Outsourced Accounting Services

by | Jun 20, 2022 | Healthcare, Outsourced Accounting & CFO

From Startup to Success

Monarch Medical doubled revenue and tripled their workforce by partnering with expert outsourced accounting. See how your healthcare technology business can achieve similar growth with proven financial strategies.

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“[Sharai] takes pride in what she does. [Lavoie] is not a giant firm where there’s no sense of ownership or sense of pride. For us, that was extremely important.” 

Client

Monarch Medical

Industry

Medical Software

Outcomes

  • Annual revenue doubled
  • Headcount increased from 12 to 35 employees 

Solutions

  • Implemented cloud-based ERP solutions 
  • Set up software to track commissions
  • Built a system of internal controls 
  • Created a new purchase order process 
  • Supported payroll and HR functions

The Client

Monarch Medical operates in a highly regulated and competitive industry, where the quality of products and services directly impact patient care. At the outset of the engagement with Lavoie, Monarch (which was purchased by Eigen Capital in 2012) had minimal processes especially in terms of accounting systems. Lavoie took responsibility for the entire back office support function of the company, with Eigen Capital’s leadership noting of Sharai Lavoie “she just knew what to do.” Monarch doubled its revenues, increased its workforce and improved its systems relative to invoicing, purchase orders and preparing financial statements. This resulted in many positive outcomes, with Monarch’s senior leaders noting, “The business is running like a well-oiled machine.”

As a medical software company, Monarch Medical creates algorithmic dosing products associated with insulin for hospitals and other healthcare clients. These products help save lives and improve patient care while giving healthcare providers the tools to treat patients more efficiently. 

In 2012, Eigen Capital purchased Monarch’s IP product and services while integrating the existing workforce into its operations. The existing business consisted of 12 employees and minimal accounting and business infrastructure. Also, Monarch’s products exist in an FDA-regulated industry and must meet rigorous standards of quality and reliability.

The Challenges: A Lack in Structure 

Monarch Medical’s baseline accounting processes lacked structure. Leaders of Eigen Capital noted, “All of the mechanics of administering the company, from an structural standpoint, didn’t exist.” 

As a result, accounts payable and document retention policies were not well-defined. Also, purchase orders and purchasing processes were not in line with industry best practices. 

Monarch did not have an accountant or financial professional on staff to help improve operations. For Monarch to provide better service to internal and external customers, while maximizing shareholder value, it was necessary to create policies, processes, and procedures to run the business.

The Need: An Experienced Outsourced Accounting Firm

Monarch needed an outsourced accounting service provider to set up the entire back office function of its business. This service provider needed to be self-sufficient and low maintenance while having the tools and proficiency to revamp current operations and support future growth. 

Also, Monarch and Eigen Capital were looking for a financial service provider experienced with private equity clients. Lavoie’s holistic approach, accounting software applications and experienced personnel were an ideal fit to establish, improve and expand Monarch’s processes. Given the entrepreneurial mindset of Lavoie’s founder, Sharai Lavoie, and Monarch’s leadership team, there was a commonality of mindsets.

Sharai Lavoie also has a background in the healthcare industry. This proved critical for understanding the dynamics of Monarch’s operating environment. There is a wide spectrum of healthcare accounting applications, cloud-based technology solutions and add-on modules to standard accounting systems. Knowing how to parse through this array of systems to find the optimal solutions, based on the industry, size and nature of a company’s operations, is no simple task. Lavoie had the flexibility and knowledge base to do this effectively while having the acumen to communicate with private equity professionals on complex matters. Eigen Capital’s leaders appreciated Sharai Lavoie’s work ethic noting, “She takes pride in what she does.”

The Solutions

System Optimization and Process Improvement

To meet the objectives of the engagement, Lavoie implemented tools to make the company’s accounting systems more robust. These included cloud-based applications to streamline accounting and payroll tasks. Processes were standardized, measured and tracked to improve performance. For example, customer contracts were standardized. This led to the better management, evaluation and recording of important transactions that directly impacted the revenue cycle and cash management.

Internal Controls

A system of internal controls was implemented to meet the regulatory demands in this industry. Whether it was document retention policies, a series of account reconciliations to verify the accuracy of balance sheet accounts, or protecting confidential information, this system of controls was coordinated with all company personnel for maximum effectiveness. Lavoie participated in HIPPA training and integrated those guidelines relative to the tasks and accounting procedures they completed. Without an effective system of internal controls, a myriad of risks can impact the continued viability of Monarch Medical, which is why Lavoie placed emphasis on the integrity of the solutions implemented.

Commission Tracking 

Recommending and establishing the use of software to track commission, resulting in more clarity and accountability for the sales team to see commissions building up in real-time, was a beneficial best practice. It brought alignment and transparency for all stakeholders in the organization, improving morale, sales, accounting and other processes. Aligning business units is critical for efficiency and the continued growth of an organization, as well as for maintaining a competitive advantage in the global economy.

Attaining Purchase Order in Advance 

Another significant achievement was a new process to coordinate with hospitals to attain purchase orders in advance. Proof of purchase orders allows for bank funding alleviating funding concerns or restrictions. This process was integral for growing the business and was facilitated by Lavoie’s staff members. Fine-tuned processes are critical for enhancing the speed and capabilities of operations, as accounting supports management decision-making and helps attain the resources necessary to achieve organizational objectives.

The Result: Doubled Revenue 

Over the course of the engagement with Lavoie, Monarch doubled its revenues, increased its headcount from 12 to 35 employees and improved cash flow through effective accounting and treasury procedures. 

While some hospitals tend to be slow payers, Lavoie’s team worked with these customers to speed up payment and make more cash available for Monarch’s ongoing operations. Lavoie’s team undertook the many labor-intensive tasks required to streamline operations and establish a month-end-close for financial statement preparation.

Lavoie has proved to be a trusted advisor and strategic partner in the running of day-to-day operations of the business while building the infrastructure for future growth. Lavoie also participated in the interview of the CEO for Monarch Medical with Eigen Capital. This type of insight, combined with a clear illustration of company performance and the management of operational tasks, is where Lavoie’s added value really shows. Having a trusted partner to look to for advice and practical experience can yield a significant return on investment.

In Summary

Monarch Medical engaged Lavoie to perform outsourced accounting services, and help support the growth of their business while improving the efficiency, effectiveness and accuracy of Monarch’s financial reporting processes. The engagement was a success, with Monarch Medical doubling its revenues. 

If you’d like to explore how Lavoie can help your business, set up a consultation today. 

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Top Private Equity Accounting Mistakes & How To Avoid Them

Top Private Equity Accounting Mistakes & How To Avoid Them

by | Feb 22, 2022 | Entrepreneurs, Financial Planning & Forecasting, Outsourced Accounting & CFO

Accounting is one of the most important ingredients of success for private equity firms large and small. 

When outsourced accounting is optimized for the best practices of private equity, it becomes an additional catalyst for success. On the other hand, if accounting is not done properly based on the unique aspects of a private equity firm, the results can seriously hinder performance.

In order for private equity accounting to be a catalyst for success, it needs to be competent and actually bring value in several key areas including:

  • Leveraging next-generation automated accounting technologies to enable scale
  • Seizing any and all opportunities to put in place real-time accounting reporting
  • Extracting value from accounting practices to support strategic growth 

While the goals for private equity accounting teams are clear, reaching them can prove challenging. In this article, we want to take a closer look at a few of the most common accounting mistakes made by private equity firms and how those mistakes can be prevented.

3 Private Equity Accounting Mistakes & How To Avoid Them

1. Failure To Scale Accounting Systems

One of the primary accounting mistakes made by private equity firms is the continued use of manual accounting processes while trying to scale growth. If your accounting team is spending most of their time manually performing tasks, the growth of your portfolio companies will be hindered.

The key to avoiding the failure to scale accounting systems is by implementing clearly defined workflows across intradepartmental teams, which are backed by automated accounting technologies. 

There is an increasing number of accounting software-as-a-service (SaaS) platforms covering a wide range of accounting functions. It can be helpful for private equity firms to consult with qualified accounting SaaS specialists to help build an ecosystem of these platforms for your firm. 

This accounting SaaS ecosystem will bring automation and scale to the accounting operations across your portfolio. Instead of hindering growth, this automation will help scale and empower your firm’s growth.

2. Making Key Decisions Based on a Lack of Real-Time Information

Private equity firm principals and partners need to have the most up-to-date accounting data as possible. 

Prior to the entrance of SaaS accounting platforms, private equity leaders had to rely heavily on the CFO for the pulse on the accounting state of affairs. And often, the CFO themselves did not have the most up-to-date accounting reports. With the introduction of an automated accounting software ecosystem we previously discussed, it is now possible for all leaders of the firm to have access to real-time accounting data. 

This real-time view of accounting reporting and performance is a game-changer for the private equity industry. Leaders of private equity firms can now make the most informed decisions possible about their portfolio companies. 

Often events can unfold rapidly in the mergers and acquisitions world, and vital decisions about the future of a given portfolio company need to be made quickly. In these situations, the old method of having to wait weeks for accounting data to be compiled is a thing of the past. With the current software ecosystems properly implemented, private equity leaders have the key information they need in real-time to make important decisions.

It is imperative that CFOs and accounting leaders avoid the mistake of allowing delays in their accounting reporting systems due to outdated technologies and processes. If these delays aren’t remedied, the leaders of these firms could end up making poor strategic decisions about their portfolio companies and that could prove very costly. 

In order to ensure you are taking advantage of all the opportunities to put in place real-time accounting reporting systems, it is helpful to partner with a consultant that has the ability to understand your unique portfolio and where those opportunities exist. Doing so will result in tremendous benefits for the leaders of your firm when it comes time to make big decisions about the future.

3. Mismatched CFOs

Selecting a CFO for your private equity firm is one of the most important decisions you will make. One of the key roles your CFO should play is in knowing how to use accounting practices to aid rapid growth.

As we discussed earlier, many private equity firms have a growth focus. The mistake that is commonly made is when a private equity firm hires a CFO who does not have robust experience in running the accounting practice to maximize the growth of the organization. 

The reality is many CFOs come from backgrounds that are focused more on accounting for mature companies. In these contexts, the CFOs have not spent enough time in a high-growth environment. They may be very capable CFOs—even coming from very large enterprises. However, if they have not had experience in running a successful accounting operation towards growth, they will likely be unqualified as the CFO of a private equity firm. 

In order to avoid these mistakes, private equity firm leaders should search for CFOs with demonstrated experience in creating and running accounting systems for high-growth companies. 

For CFOs to be successful with accounting practices in a growth environment, they need to have the ability to bring meaningful strategic guidance to the leaders of the firm. This ability to bring guidance can only come from significant past experiences in running the accounting operations in sometimes volatile and chaotic growth environments.

These CFOs are not expecting to show up on day one and have tightly organized systems in place. On the contrary, they have had past experiences taking a somewhat disorganized, rapid growth situation and cleaning up the accounting operations—streamlining and scaling them in order to foster further growth.

The best way to find a CFO who could be a potential fit for your private equity firm is to ask them during the interview process what strategic growth-related guidance they have given from an accounting perspective in the past at their previous organizations.

Let Accounting Help Grow Your Private Equity Firm

At a big-picture level, the accounting practice for your private equity firm needs to be just as growth-focused as the rest of the firm. CFOs with a maintenance-only mindset who lack the ability to bring strategic accounting guidance to the table when it comes to growth, will not let your firm realize its full potential. Our team of experienced outsourced CFO professionals brings extensive knowledge and industry-specific insights to strengthen your financial decision-making for your private equity firm. 

Similarly, sticking with outdated accounting technologies and processes will hinder the growth of your firm as you try to scale your portfolio. Not only should you seek the assistance of a qualified consultant to help you select and implement an accounting SaaS ecosystem, you should also have this advisor help you bring real-time accounting reporting to all the leaders of your firm. 

In the midst of rapid growth, it can be difficult to find the time and resources to take the appropriate steps you need to take to ensure the success of your accounting operation. That is why it can be helpful to find a consultant you can trust to aid you in these important initiatives for the future success of your firm. 

To learn more about how Lavoie can help your private equity firm avoid making the mistakes in this article, contact us online or give us a call at 704-481-6699 today.

How Outsourced Accounting Firms Help Businesses Survive Economic Downturns

How Outsourced Accounting Firms Help Businesses Survive Economic Downturns

by | Jan 10, 2022 | Outsourced Accounting & CFO

Economic uncertainties continue to plague the United States due to the Delta Covid variant. According to a September 2021 Wall Street Journal article, “In recent weeks many economists lowered their forecasts for third-quarter economic growth . . . amid the spread of the highly contagious Delta [Covid] variant.” 

For early-stage, high-growth businesses and private equity firms, the challenge of navigating economic downturns has rarely been more prolonged and confusing. Extraordinary supply and demand challenges brought about by the pandemic have made it very difficult for businesses and private equity firms to manage and report their finances as well as to predict future business performance.

One of the solutions many businesses and private equity firms are moving to is an outsourced accounting service. Outsourced accounting services offer highly integrated and technologically advanced solutions for weathering the accounting and finance storms brought about by the current economic downturn.

Here is a closer look at 3 ways an outsourced accounting firm helps businesses and private equity firms during an economic downturn:

1. Providing Reporting and Analytics That Are Up to Date 

One of the challenges presented by economic downturns is the speed at which changes occur. Negative surprises brought about by an economic downturn can have immediate effects on business performance and financial results. A difficulty arises in these cases when business and financial reporting is lagging. 

For example, if you are a large catering equipment manufacturer and pandemic policies have suddenly closed buffets and catering events, you need up-to-date reporting quickly so that you can forecast how these policy decisions will affect your future revenues. If your financial reporting system typically takes a month or more to complete, you will be left flying blind in your decision-making as to how to react to these policy decisions. 

Outsourced accounting firms leverage best-in-class software solutions and integrated, real-time analytics to give you accurate reports fast so that you can make informed decisions for your business. With the cutting-edge technology offered by outsourced accounting firms, your critical financial data is no longer siloed but instead is integrated so that you can see how financial performance in one area impacts all other areas of the business.

2. Allowing Businesses to Focus on Growth

For high-growth businesses and private equity firms, it can be difficult to run accounting and finance operations well and grow revenue at the same time. With an outsourced accounting firm, business owners are freed up to focus on growing their businesses knowing that a highly experienced financial management partner is taking care of managing and optimizing the business’s financial and accounting operations. 

In an economic downturn, it is critical that businesses and private equity firms spend more time and effort than normal to generate new streams of revenue for the business. In order to have the extra time and resources needed to grow revenue during downturns, business owners may want to consider an experienced outsourced accounting firm to help them during these turbulent economic times.

Outsourced accounting firms are experts in utilizing the latest accounting and finance technology for the benefit of high-growth businesses and private equity firms. Outsourced accounting firms keep up with all the latest developments in accounting and finance software and how they can be best applied to your unique business. By applying these software programs to the financial operations of your business, your business will be better positioned to scale. With a better scale, you will have more time to focus on growing the sales and customer services operations of your business in order to weather the economic downturns. 

3. Offering Access to Professional Financial Expertise

With an outsourced accounting firm, you always have access to a qualified controller or fractional CFOs who can provide you with valuable guidance on financial decisions about your business. Many young, high-growth businesses have dynamic sales leaders, product designers and customer service operations, but they do not have experienced and sophisticated finance and accounting teams in-house. 

Furthermore, the cost to hire and develop in-house accounting and finance teams can be expensive and time-consuming. With an outsourced accounting service, you have access to an experienced accounting and finance team from day one. Your outsourced accounting service is not only running your accounting and finance operations day-to-day, but they are also there when you need them for any guidance and insights you need about the financial matters of your business. 

These outsourced financial experts can help business owners make the best decisions possible about how to allocate and utilize capital during economic downturns. These experts can also help business owners think strategically and plan for how to weather an economic downturn for the next 12-24 months. When an economic downturn is happening, the stakes are much higher for businesses, and it is very important to avoid making unhealthy business decisions. 

For example, if you decide to invest in a capital project at the wrong time and then an economic downturn occurs, your business may be left without adequate capital to continue operating and you may be forced to go out of business. Having an expert outsourced accounting partner who knows the exact financial status of your business is an invaluable asset in these situations by preventing you from making an unhealthy business decision during an economic downturn.

As a business owner or private equity firm, you may be looking for ways to reduce expenses during an economic downturn. One of the largest, unexpected expenses for employers is when an employee leaves the company. According to Gallup, the “cost of replacing an individual employee can range from one-half to two times the employee’s annual salary.” Employee turnover expenses can be especially detrimental during a downturn because they are oftentimes unexpected. 

With an outsourced accounting firm, you not only have the benefit of scalable financial operations led by proven experts, but you also receive the added benefit of knowing that you will not have unforeseen turnover expenses from accounting and finance employees who leave the company during a downturn like the Covid pandemic. Instead, you will have the constant support of a dedicated outsourced accounting team that knows the financial status of your business inside and out. 

Partner With Lavoie 

Our outsourced accounting team is here to offer you an accurate assessment of the current financial health of your business. Our team is also here when you need us the most during an economic downturn. We’ll help you decide the best course of action to take to weather the economic storm and return once again into calm waters for your business. To learn more about Lavoie’s outsourced accounting services, please contact us today.