Compliance

Article Dean Dorton

Repost from Avalara , Image from Santa Clarita Consultants

2018 was an exciting year for sales tax. 2019 promises to be the same.

Sales tax wonks will remember 2018 as the year the Supreme Court of the United States overruled the physical presence rule that for decades kept states from taxing remote sales. The court’s decision in South Dakota v. Wayfair, Inc. (June 21, 2018) allows states to require a remote seller with “economic and virtual contacts” in the state (economic nexus) to collect and remit sales tax, even if it has no physical presence in the state.

This is huge, and it will take months if not years for the full ramifications of the decision to play out.

Fallout from Wayfair

As of the end of 2018, more than 30 states and Washington, D.C. have adopted economic nexus policies, including two giants, California and Texas. Fallout from the Wayfair decision is sure to continue in 2019. Several states have already filed economic nexus legislation for consideration in 2019, including Arkansas, Missouri, and Virginia. Meanwhile, sales tax simplification measures are under consideration in Texas because the Lone Star State has more than 1,500 local taxing jurisdictions.

Although the Wayfair case was triggered by an economic nexus law, the decision doesn’t prevent states from pursuing remote sales tax revenue via different routes; all it does is put an end to the physical presence rule. Thus, states could pursue a variety of remote seller sales tax laws in 2019, including affiliate nexus, click-through nexus, or cookie or software nexus. Furthermore, more states will likely require marketplace facilitators to collect and remit sales tax on behalf of their third-party sellers. What will this mean for businesses that sell through multiple channels? There’s a good chance we’ll find out in 2019.

An act of Congress?

Will the rapid growth of economic nexus and other remote seller sales tax laws inspire Congress to take up the issue? Perhaps. It could never agree to expand state tax authority to remote sales, but it might come together to limit it. A handful of bills seeking to do just that has already been introduced.

There’s more to sales tax than remote sales

States’ newfound freedom to tax remote sales isn’t the only sales tax news making headlines. Expect to see the following in 2019:

  • More states apply economic nexus to other taxes. Texas is already looking at how economic nexus affects franchise tax. Expect other states to move in that direction.
  • More taxes on streaming services. As more people stream their entertainment, more states will look to tax those services.
  • More taxes on sins. Some states will change the way they tax products like alcohol and tobacco; others could start to tax newly legal products such as marijuana.
  • More product taxability changes. In 2019, more states may exempt certain products like tampons because they’re essential. Others may subject products like soda to a higher rate because they pose a health risk. And some states may exempt newish products and services simply because they’ve never been taxed before.
  • Rate changes: There are sure to be many.

There are many uncertainties in life, and with sales tax. But one thing is certain: 2019 will bring many sales tax changes.

Local to the Raleigh-Durham area? Join Dean Dorton and Avalara for a high-level overview on how cloud financial management technology eases compliance processes for both sales and use tax, along with revenue recognition and contract management.

When: March 26, 2019 from 8:30 AM – 11:00 AM

Where: Avalara Durham offices, 512 South Mangum Street #100, Durham NC 27701

Who: All finance professionals who play an important role in industries that are affected by compliance regulations- including sales and use tax, economic nexus, ASC 606, HIIPA, GAAP, revenue recognition, etc. CFOs, Controllers, Accountants, VPs, and Directors of Finance, Tax Specialists, etc.

Article Dean Dorton

This blog is the January Edition of our CFO Minute: A Sage Intacct ERP Series.

THE PHANTOM OF COMPLIANCE— Whether you’re disguised behind a white, glossy face mask, feeling heartbreak and despair or you’re at your desk, hiding behind a handful of incorrect spreadsheets and silently yelling in frustration- we get it.

Life throws us unexpected daily challenges.

And so do new accounting standards. For many finance professionals, revenue management is among the top challenges today. With its combination of loosely defined regulations, evolving standards—such as the new revenue recognition rules under Accounting Standards Codification (ASC) 606 and stiff penalties for noncompliance, revenue management creates unacceptable levels of complexity and variability that often overmatch the resources and expertise of many finance teams. Faced with these barriers, companies are looking to automate revenue management processes to gain efficiency, strengthen compliance, and improve visibility.

Why compliance can’t wait 

 The Financial Accounting Standards Board (FASB) issued ASC 606 to be effective at the start of 2018 for public companies, and the start of 2019 for private companies… Which happens to be NOW! Some companies have yet to acknowledge that they need to abide by these new regulations, but the reality is that the contracts you are writing today that extend into the 2018/2019 adoption date must be accounted for under ASC 606.

Preparing your business for the shift (and staying prepared when it comes along) is a time-consuming process—especially if your accounting system lacks built-in readiness. If you have a subscription-based business, you likely enter into complex contracts and agreements with customers. The new standard requires your company to capture and report on this information, which your accounting system may not currently track.

As a result, you need to identify and remedy critical data gaps before your organization is subject to the risk of fines from the SEC, increased auditing costs, and rippling relationships with your auditor (who isn’t happy that their client didn’t adhere to GAAP guidelines!)

Overall, your company’s reputation and finance department can be negatively impacted if regulations are not implemented.

How Sage Intacct’s automation can help

Fast-growing businesses are choosing Sage Intacct’s leading cloud financial management technology to automate their subscription management and revenue accounting. This can save you and your staff hundreds of hours each month on calculations, manual entry, and reconciliations.

Check out our free datasheet below to learn how automated revenue management can help you:

  • Scale regulatory compliance
  • Speed quote-to-cash by 30%
  • Forecast revenue and get real-time SaaS and software metrics
  • Gain control over revenue, billing, and contracts

Article Dean Dorton

How the Cloud Delivers Business Agility for the Modern SaaS CFO

Adaptable. Responsive. Flexible. All these are hallmarks of business agility, a company’s ability to quickly and intelligently change to meet customer demands, seize new market opportunities, and maintain a competitive advantage.

Business agility is a critical trait for modern CFOs in all industries, but especially those working in software/SaaS companies. Scaling a subscription-based business, changing criteria for revenue recognition, and other challenges make a powerful, adaptable financial management solution an absolute must-have for SaaS CFOs.

In particular, a cloud-based system like Sage Intacct can help you:

1. Get critical SaaS metrics how and when they’re needed. You can make quicker, more sound strategic decisions with real-time SaaS metrics that go beyond GAAP metrics to include operational metrics. These are captured in an automated process from inside the system and are as complete and accurate as your GAAP financials. Metrics are delivered via a dashboard as performance cards, reports, charts, and graphs that you can use to spot trends, compare to benchmarks, drill down into the source data, and more.

2. Easily manage the complexities of subscription billing. It’s time to eliminate labor-intensive manual calculations with built-in tiered payments and usage-based billing for your customers. You save time and drive revenue with models that keep up with the complexity of your business. From billing across regular periods to non-linear contract billing, like milestones, you have the flexibility to adapt pricing and billing to the best revenue process for your business.

3. Seamlessly integrate your CRM and financial management solutions. Cloud technology lends itself to tight integration, so you can use your CRM system to enter customer and contract information and synchronize with your business financials in real time. Conversely, you can maintain billing templates and subscription schedules in your financial system, while providing billing and payments visibility to salespeople.

4. Automate daily revenue tasks and regulatory compliance. New guidelines for revenue recognition—ASC 606 and IFRS 15—make an already complicated accounting task even more challenging. A good financial management system will include templates and schedules to automatically recognize revenue according to the latest accounting standards. You should be able to recognize revenue and amortize expenses, even as subscriptions and contracts change. Also, dual treatment of contracts according to both ASC 605 and ASC 606 will provide you with immediate visibility into how the new regulations affect your financials.

Business agility comes standard with Sage Intacct and Massey Consulting

With 2019 on the horizon, SaaS companies need a financial management system that enables them to meet new challenges and opportunities as they arise. That’s why modern SaaS CFOs rely on cloud financial management software from Sage Intacct and the business technology experts from Massey Consulting. Take your first step toward business agility with a free consultation from Massey Consulting, your cloud financial management experts.

https://online.intacct.com/WebsiteAssets_ondemand_webinar_tech_savvy_cfo_agility.html?referral=massey

Article Dean Dorton

5 Reasons to Be Unthankful for Your Financial Management Software in 2019

‘Tis the season of gratitude. You have much to be thankful for—except for your financial management solution. As 2019 grows closer with its new challenges and opportunities, the limitations of your accounting software become all too clear. Here are five reasons why it’s okay to be ungrateful this Thanksgiving season:

1. You’re trapped by difficult, costly, and time-intensive upgrades. It’s hard to get the latest functionality if your company lacks the IT resources to upgrade related software, databases, and operating systems that are required for the upgrade. It’s no wonder that you’re making do with the risks and inconveniences of outdated software. And should you decide to upgrade, you may find the updated accounting system still lacks key features—so you’re stuck using workarounds.

2. You’re held back by disconnected systems and processes. The cost of integrating your on-premises financial management system with various applications and databases can be prohibitively high. Your finance team has to use manual, error-prone spreadsheets for crucial tasks like enterprise consolidations and revenue recognition. Even if you do decide to fund your enterprise integration, you’re often trapped in a constant maintenance cycle, where every new software upgrade breaks your integration.

3. You can’t keep up with business growth. Your legacy accounting system likely wasn’t designed to support the fast growth and expansions that smart businesses are pursuing. If you’re acquiring business units, you may be trying to cobble together a consolidated view across entities that use different accounting systems. That leaves you unable to track the costs of different lines of business or services projects. Soon, you’re hiring more people just to keep up with transaction volumes.

4. You’re challenged by new business requirements and regulatory compliance. Considering a new revenue model like subscriptions? Great! However, that’s placing new demands on your finance team, because the billing and revenue-recognition requirements for subscription businesses are more complex. Unfortunately, when your traditional, outdated accounting system was implemented, these new requirements and rules didn’t exist. Attempting to bolt on or retrofit support for these sweeping changes is either painful, expensive—or impossible—because your accounting system was never intended to do so.

5. You can’t fully track your business. Your legacy accounting system may is still be operating in batch-processing mode—slowly and with no real-time visibility—simply to deliver rigid financial reports. You’re likely forced to rely on third-party reporting and analysis tools to get even basic answers. Creating new reports, asking new questions, or customizing your old reports to reflect changing business needs is impossible. And you can’t support the self-service capabilities that business users want.

Tis the season to give thanks, with Sage Intacct and Massey Consulting

The new year is coming faster than a turkey can trot—which is pretty fast, believe it or not! It’s time to kick your old accounting system to the curb and give thanks for new technology, such as cloud financial management software from Sage Intacct. It’s designed not only to meet today’s business’s needs but also to adapt as your business grows. By moving to a best-in-class cloud financial management solution, you’ll gain time to be more strategic as you move into 2019 and beyond.

You’ll find plenty of reasons to give thanks this season with a free consultation from Massey Consulting, your cloud financial management experts.

Article Dean Dorton

In the 1960’s, Artificial Intelligence and machine learning was something we read about in science fiction books. Today, it’s a reality.

As thought-leaders delved into the topic of AI and machine learning in finance at the recent 2018 State of Technology conference, it was easy to see how the future can take shape for financial management and accounting.

So, what might a future in financial management look like? Where are we likely to see AI and machine learning support finance, and how can accounting take advantage of technology’s advancements?

Auditing

Auditing is the first place finance leaders can look to technology for support.  Instances already exist where technology via machine learning can simplify complex and tedious data examination by pouring through volumes of transactions, documents and contracts to identify anomalies in a fraction of the time it would take a person to do.

Reporting and Compliance

At present, big banks already use AI to navigate complicated regulatory guidelines.  Accounting firms are quick to follow this lead, so we should only expect that the future will offer greater compliance support and data retrieval in our financial management solutions at the company level.

Sage Intacct, a best-in-class cloud accounting solution is the first of its kind of software designed to support the new ASC 606 and IFRS 15 guidelines for subscription-based companies and non-profit organizations alike and has promised there is more to come.

A Bright Future

Siri and Alexa occupy center stage, but financial management should keep on the lookout for Sage Intacct’s Pacioli, now in the works.

The cloud-based accounting software company is currently developing their own machine learning technology designed to record your activity to make information retrieval faster and easier for your accounting teams.

While no date is set on the release of Pacioli, it is expected that Sage Intacct aims to have it up and running sooner rather than later.

Sage Intacct’s offers strong financial management solutions, and expert streamlining for audits, consolidations, compliance, and collaboration. For this reason, we can anticipate a bright future with Sage Intacct when it comes to AI and machine learning.

If your business is rapidly growing, both in size and complexity, it might be time to consider adopting a system that can grow and scale with your business.

To find the right financial management platform to replace your current static, on-premises software system, we can help.

Give us a call for expert guidance into options that have the strength to grow and change with the future of accounting technology.

*Credits: google images

Article Dean Dorton

Planning is important, but taking action is critical for subscription-based companies if they want to be ready for the upcoming ASC 606 revenue allocation guidelines.

Forward-thinking subscription-based companies have it right by acting now. “But this far ahead?” you may be thinking.  We say, “Yes.” Your company cannot afford to wait. Here’s why:

If companies wait too long to make changes in the way they do their tracking, internal controls, and revenue allocation processes, they can anticipate major obstacles and overwhelming workloads.

By waiting until the last minute, companies that wait will burn out their teams, run into cascading errors in tracking and billing, and ultimately, face the risk of non-compliance.

Expenses, fees, collectability, payment terms, and contracts are all affected by the changes coming for ASC 606.  

Because the changes will affect revenue recognition from beginning to end, that means your current processes will change significantly, from beginning to end, as well.  Also, ASC 606 compliance expectations will not only affect contracts coming in, but also current contracts for future and past revenue.

But here’s the bright side:  Companies that are setting up new processes now will be in a much better position when the ASC 606 changes take effect. These companies realize that not being ready could result in productivity bottlenecking, increased costs, and errors in reporting, billing, or allocations. All of this adds up to a compromise in business success, overall.

Sage Intacct is a best-in-class financial management solution, and the first of its kind that is designed to accommodate the new ASC 606 guidelines, where subscription-based companies need the most help.

Sage Intacct supports finance teams to streamline the upcoming revenue recognition complexities with:

  • Automated reporting that eliminates the headaches of more spreadsheets, helps track collectability thresholds, and flags subscriptions changes or ones coming up for renewal.
  • Deep visuals into revenue and expense forecasts that reflect current guidelines against the new guidelines for more accurate projections, and enhanced views into performance.
  • Billing, both in subscriptions and usage-based, to speed invoicing processes and save time when your workload is already at max capacity.

Don’t get caught off guard. Start planning now with a strong financial management solution so your teams can be armed with the right tools.

Feeling overwhelmed? Reach out! We can help make the adjustment process easier, so your company keeps growing strong even in the face of increased compliance expectations.