Congratulations—you’ve raised equity! What now? And what does it mean for QuickBooks financial reports?
You’ve successfully raised equity from an external investor—or maybe you’re still in the courting stage, wooing investment opportunities. We’ve heard the equity process described as a marriage—albeit one with a planned divorce (the exit). And just like a marriage, the relationship with an investor requires a commitment on both sides. Your new investors want business processes, workflows and controls in place—like those previously only found in QuickBooks financial reports—that are capable of protecting and growing their investment. Below are four key drivers that not only motivate investors to engage—but keep them happy once they do.
Investors want auditable financials
Companies receiving equity funding must be scrupulous in their accounting. Investors want to see that their companies that have the financial and operations reports which allow them to deeply understand a business in familiar, industry-standard formats, and from an accounting system that is secure and auditable.
Entry-level accounting applications like QuickBooks financial reports do not provide the strict accounting controls and audit trails that businesses seeking (and spending 😊) outside investment need. For example, QuickBooks doesn’t promote or enforce business process controls throughout your operation, including ensuring compliant separation of duties. It also doesn’t provide your management team with deep financial and operational performance visibility critical to achievement of your shared objectives to increase market share, revenue and profitability.
Investors need to know you can grow
Investors need to know they can grow a company. Companies receiving equity investment are wise to adopt a financial management solution that can unequivocally handle that growth in smart, compliant ways. Investors want to know their investment targets have the infrastructure to grow and generate a return on investment that meets their expectations. You’ll need to prove you have the capability to scale end-to-end business processes and garner real-time information about the profitability of your organization.
QuickBooks is often the “go-to” for smaller companies and startups. It’s easy enough to implement and easy to use. However, as you grow, and your business requirements get more sophisticated, you’ll likely run into the frustrating limitations of QuickBooks financial reports. Our clients relate stories of time-consuming consolidations, inter-company transaction processing limitations, slow and unreliable reporting, error-prone manual processes and security issues. The fact is, QuickBooks simply isn’t designed to provide the robust financial-management functions a business preparing for or receiving equity investment needs.
Investors want actionable insight
Investors love reports. They want insight into every aspect of your operations. Access to timely relevant data—sliced and diced, detailed and consolidated—that enables you and your investment partners to make the right decisions that result in repeatable, profitable growth. Robust and flexible reporting tools providing visibility necessary to navigate market changes, understand performance and make course corrections as needed.
QuickBooks users often export data to spreadsheets in order to filter and calculate data sets against operational data. Obtaining reports such as profit and loss by location or revenue by employee are difficult, if not impossible. QuickBooks simply cannot offer enough depth and breadth of insight into the financial and operational aspects of your company to satisfy investors that you’re a worthy target and to keep you profitably on track once you receive that investment.
Competing in the as-a-service economy
Increasingly, companies are moving into the as-a-service economy, selling their products and services through a subscription model—and investors are taking notice. However, contract and subscription billing is inherently complex and most financial applications are only designed to handle the routine, traditional, transactional sales model of selling widgets. When you sell a solution that consists of combinations of software subscriptions and services, entry-level applications fall flat.
If you’ve already entered or have plans to enter the Anything-as-a-Service (XaaS) market, your investors will want to see an accounting solution capable of helping you build and manage and report on recurring revenue streams, with sophisticated—yet simple to use—subscription billing capabilities. And a solution that’s also a Software-as-a-Service (SaaS) application itself will appeal to cloud-savvy investors.
Say “I do” to Sage Intacct—and Silverware
Since their investment is unsecured, an investor needs to become very comfortable with the people, processes and technology they are backing.
Sage Intacct is sophisticated—but still easy to use—financial software with the features investors love: fast consolidations, scalability, multi-entity support, shared charts of accounts, real-time reporting, smart revenue recognition, and more. With rock-solid financials, deep operational insights, easy management of subscription lifecycles, and simplified management of multiple entities, Sage Intacct is an ideal option for companies before, during and after equity investment. Many Sage Intacct customers have successfully scaled up and taken their companies to a public offering and beyond—all while running Sage Intacct. It’s also not insignificant that many equity investment firms choose Sage Intacct as their own financial management system.
The financial management solution you choose to help you through this development phase is only half the equation; you’ll also need a partner that understands your industry, the software and what it takes to satisfy investors. Silverware is that partner. We’ve successfully guided dozens of our clients through equity investment opportunities.
If your relationship with an equity investor is really like a marriage, bring Silverware on early in the dating process so we can help ensure a happy and profitable union. Just think of us as the best man or maid of honor in the deal. And congratulations!