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The Best Blogs & Resources for Tech Startups


Whether you are just starting or beginning to scale your startup, there is a wealth of resources on the internet containing advice on sales, technology, capital raising, and anything else you could need for your startup. We’ve picked out a few of our favorites and present them here, in no particular order.

A VC – Musings of a VC in NYC


About: The blog is written by Fred Wilson, a Wharton alum currently serving as Partner at Union Square Ventures.

Having the word musings in the tagline is very appropriate for this blog, as the articles are the thoughts and writing of one individual and are not presented in a typical format. While the writing style may sound aloof, the ideas and content are anything but that. Fred touches on countless topics – he has 224 articles on blockchain, 157 articles on crowdfunding, and most importantly, 3,788 articles on VC & Technology.

Our favorites: While the last post was August 2019, we love the MBA Mondays section. It covers a wide range of extremely relevant topics for startups and their founders, including employee equity, financing options, and management teams. The archives for Management also contain a ton of quality content.

Andreesen Horowitz


About:  While this is a venture capitalist firm, we wanted to highlight their content tab.  You’ll find a wide range of subjects covered in videos, podcasts, and articles.  I recommend browsing and exploring their topics page, where a variety of articles can be found from AI to fundraising.  Ben’s book, authored by Ben Horowitz, is a particularly well written and interesting section covering advice on starting your own business.

Our Favorites:  Check out their podcasts, particularly their a16z podcast, which nicely summarizes current events and introduces wide-ranging topics relevant to growing your business and building your team.

Morning Brew


About: The site is mostly a news aggregation site, but they have daily newsletters that cover the most relevant business news. This includes company-specific news, current events, economic policy, and international issues, among other items. While not geared towards start-ups, the site contains coverage of the large businesses that most start-ups aspire to become one day. And regardless of industry or your particular position, it’s always important to stay up to date on news, trends, and policy. Morning Brew is also now up to four newsletters (probably more since this writing). In addition to their original newsletter, they now have specific coverage on emerging technology, retail, and marketing, so if you are in one of those fields it is a great option to stay informed on the space.

Our Favorites: Morning Brew entered into the podcast arena over a year ago with Business Casual, which can be found on Spotify. Despite the trendy/corny (depending on who you ask) name, the podcast boasts some of the most successful entrepreneurs and business leaders, specifically in the tech and startup space. They blend educational information with insight from thought-leaders, and occasionally have multi-episode themes featuring a deep dive into important topics for entrepreneurs.



About: Well known for their annual tech conference, TechCrunch Disrupt, the site is a true traditional media website with endless content. Understandably so, given that it sits under Verizon Media’s umbrella.

The site contains over ten topic-specific newsletters, deal news, advise, webinars, analysis, and opinions. The Startups section has a very wide range or articles and topics, so it may be slightly harder to navigate directly to what you are looking for from that page, but you are bound to stumble on some interesting articles there, as there are probably between 20-40 articles posted on any given day.

Our favorites: In addition to the articles itself, if you navigate to The TC List, you can find a long list of investors in the venture capitalist industry. We all love reading about technology and capital raises, but what’s better than an actual list of people who may provide the next check for your capital raise.



About: I suppose you can skip this one if you aren’t in a SaaS business. The site is intended for the purpose of scaling your software as a service business, as the name indicates.  SaaStr might be slightly overwhelming upon first glance because it’s chock full of great resources, but it has a very intuitive organizational structure.  It has a blog and podcasts that are updated regularly, a great networking community of other leaders in the industry, and an abundance of educational content.

The educational content comes in the form of their university, which offers courses and free eBooks, an interesting live chat function with other members of the university, and an academy which is their university lite with blog, video, and course content in one easy, navigable place.

Our Favorites:  Consider signing up for one of their yearly events (once it is safe to travel) that attracts over 15,000 attendees to the San Francisco Bay Area or 3,000 executives and VC’s to Paris.

We hope you find some (or all) of these resources to be of some help in the future! And if you need assistance with the accounting, bookkeeping, and finances for your start-up, no need to search the web any further. Give us a call or send us an email. We would be happy to provide a free evaluation or your accounting needs.

Passing your Pre-Award Accounting Survey – Direct Costs by Contract

To assist with preparing for a Pre-Award Survey of Prospective Contractor Accounting System, in this series of articles we are reviewing the Evaluation Checklist criteria on the Standard Form 1408. The Standard Form 1408 serves as a guide for making sure you are prepared for the audit, and as such we will be reviewing each checklist criteria within the SF1408 to help assist in creating and maintaining an adequate accounting system. Our first article discussed proper segregation of direct and indirect costs. In this article, we will discuss the identification and accumulation of direct costs by contract.

As a reminder, these articles are meant to serve as a starting point, not a master guide. DCAA, or other parties performing the audit, will perform varying procedures to determine system adequacy. Achieving a DCAA approved accounting system is feasible for any organization, but may require changes to your policies and procedures and does require a comprehensive analysis of your overall accounting system, and that includes more than just the software itself.  In this article, we are going to discuss the following checklist criteria:

2b. Identification and accumulation of direct costs by contract

FAR 31.202 defines a direct cost as “any cost that can be identified specifically with a particular final cost objective”. The most common example of this would be direct labor, direct travel, and direct materials.  If you reference back to Part 1 of the series, there is detailed information about segregating direct costs from indirect costs, and what constitutes a direct cost. The checklist criteria 2b above deals with a step after we have identified a cost as a direct cost as opposed to an indirect cost.

Once we have identified a cost as a direct cost, we then must assign these costs to a contract to achieve the criteria above. Let us take direct labor as an example. If we have a Help Desk Technician that works on Contract A, we need to “identify” and “accumulate” that employee’s salary/pay by contract in the accounting system. We must first “identify” the cost by contract. To do so, we need the Help Desk Technician to specify on their timesheet that they worked on Contract A. Next, to “accumulate” the cost by contract, when we are recording direct labor for the Help Desk Technician in the accounting system, we need to tell the accounting system that they worked on Contract A based on their timesheet. If the Help Desk Technician in a different pay period splits their time between multiple contracts, we need to split their labor cost between the multiple contracts in order to accumulate the direct costs by contract. This would be done based on the hours worked on each contract specified by the employee on their timesheet.

Putting the criteria into practice

To illustrate how to satisfy the checklist criteria, we will use QuickBooks as an example, since it is one of the more widely used accounting systems by small businesses in the government contracting industry. The terminology and processes will vary depending on your accounting system, but the concepts remain be the same. In QuickBooks, you have “Customers” and “Jobs”. Each Job must be associated with a Customer. In most cases, the agency or prime contractor you are contracting with will be your Customer. You may have multiple Customers set up for an agency, for example if you are working with multiple contracting offices within one agency, but that setup is not important for this discussion.

Let’s assume we are awarded a contract with NOAA to provide IT Help Desk Support. We will first create a new Customer if NOAA is not already created in the system as a Customer. After the Customer is created, we will add a Job. Notice when you go to add the job in QuickBooks, there is a requirement for there to be a Customer associated with every Job. Once we enter our Job Name and any other relevant information about the Job, we can save our Job and now have our contract set up in the accounting system.

With our contract set up in the accounting system, we can begin to identify and accumulate direct costs by contract, in order to satisfy the criteria for our Pre-Award Survey. The next step in our process will be charging our direct costs to the appropriate contract when entering bills, journal entries, and other transactions into the accounting system. For example, the NOAA IT Help Desk contract may require the purchase of computer equipment specifically for that contract. When the computers are purchased, and the vendor sends a bill for the computers, that bill must be coded to the contract in to identify and accumulate direct costs by contract. In QuickBooks, when creating a Bill and entering the detail information, there will be a column labeled “Customer: Job”. If the Bill is for a direct cost, then it needs to have a Job specified. In this case, we would enter the IT Help Desk Support Job name into the Customer: Job column, which is telling the system that this expense is associated with that Job.

If creating a journal entry to record direct costs, the same concept applies. There will be a column in the journal entry screen also labeled “Customer: Job”, where you would specify the appropriate contract if you are recording direct costs. As part of a monthly review of your financial statements, you can run a Profit & Loss by Job report. When reviewing this report, you should ensure that all direct costs are in fact record to a specific Job. This will help ensure you are following the steps to meet Criteria 2b. If you are using a project-based accounting system such as Unanet or Deltek Costpoint, you can actually set up the system so that charging to a direct cost account requires a project input. Unfortunately that functionality does not exist within QuickBooks, but failure to charge direct costs to a project can easily be spotted with a proper review of your month-end accounting reports.

We will close with a couple additional points to consider. The first is that for direct costs to be properly charged to contracts, any other systems or source documents in use should be designed properly. For example, your timesheets and expense reports need to be designed so that employees can select which contract they are charging their time to or which contract a certain expense was related to, if a direct expense.

The final note is that if you are having difficulty charging expenses to certain contracts, you might need to circle back to Criteria 2a, which specifies that you need to properly segregate direct costs from indirect costs. Assume that your company operates in Maryland, but has two government contracts in Texas, and you want to have office space for the billable employees in Texas. You may have determined this to be a direct cost since the rent expense exists solely to support these two contracts. When you go to identify and accumulate this direct cost by contract, you may be having trouble determining how to record this cost to each of the contracts. The reason for the difficulty is that in almost all cases, this rent expense is going to be an indirect expense given the nature of the charge. Therefore, we have failed to properly segregate between direct and indirect costs and need to focus on properly implementing that first criteria. As we will discuss throughout this series, passing the pre-award survey is not about just about software and configuration. Policies, procedures, and training of personnel are just as critical components to maintaining an adequate accounting system.

LRZ Consulting is a full-service outsourced accounting and bookkeeping firm specializing in the government contracting industry. We provide support for QuickBooks, Deltek CostPoint, and Unanet Financials and assist with maintaining a DCAA approved accounting system. If you are looking for a free comprehensive analysis of your accounting system, please contact us here.

Four Signs Your Government Contracting Business has Outgrown QuickBooks


QuickBooks is the most widely used accounting software for small businesses, and for good reason. QuickBooks is easy and efficient to use, it gets constant upgrades and patches to improve functionality, and can be a very powerful tool if used properly. However, if you are a government contractor focused on growth, you will likely reach a point in the lifecycle of your business where you have outgrown QuickBooks and require a more powerful and sophisticated accounting system that is designed specifically for the government contracting industry. The following are four areas that might trigger the need for a change in accounting systems. There are no hard and fast rules for when you should change from QuickBooks, but a combination of the following might help you identify an appropriate time to make the change.

Cost-Reimbursable Contracts: Don’t let the marketers fool you – you do not need an accounting system more robust than QuickBooks in order to pass a DCAA Pre-Award Accounting System Survey. DCAA will be looking at whether you can properly accumulate, segregate, and record costs on government contracts. This can all be done within QuickBooks, and you can learn more about passing your pre-award audit here. With this in mind, don’t let the possibility of a cost-reimbursable contract, or an IDIW that requires an approved accounting system, be the reason you switch from QuickBooks to a different system.

However, once you actually have that cost-reimbursable contract awarded and operating, your invoice generation becomes more complex and your need to track indirect rate calculations closely becomes far more important. You can stay on QuickBooks and still accomplish this, but it becomes a lot more difficult and requires quite a bit of manual work. The more robust accounting systems like Unanet and Deltek Costpoint have features that will allow you to set up your rate calculations, including pools and bases, and then the system does much of the work for you. Those systems will also produce outputs that can be used to assist in the preparation of your incurred cost submission at the end of the year.  

Volume Increase: There’s no headcount or revenue level that suddenly makes it imperative that you switch off QuickBooks. But eventually, as you grow to a certain size, a more robust accounting system built specifically for government contractors will end up saving a significant amount of time for your finance and accounting team. Functions such as processing labor allocations, generating project reports, and creating invoices will all become easier, quicker, and more accurate with an accounting system such as Unanet or Deltek.

Consolidation & Multiple Entities: Consolidation is one area where QuickBooks is lacking. Rightfully so, as it was built for the small business in mind, and most small businesses do not need to perform consolidations. If you have subsidiaries or multiple entities that require consolidation and are using QuickBooks, it will probably be necessary to do manual consolidations outside of the accounting system itself. This can be a tedious and sometimes burdensome task, that could also lead to errors. When you switch from QuickBooks to a higher-level accounting system, that new system will likely have the functionality to house multiple companies or entities within one system. The system can then be programmed to perform a consolidation within the accounting software itself, taking out the majority of processing and reducing the risk of any manual errors.

Forecasting and internal reporting: QuickBooks does have a budgeting function within their software, but it is limited in functionality and of course is not built specifically for the government contracting industry. If you are looking for more advanced forecasting and reporting, QuickBooks will likely fall short at a certain point. Areas and functions that will benefit from a more advanced system include the following:

  • Resource planning: As a government contractor, specifically under Time & Material type contracts, you want to avoid leaving money on the table or exceeding funding on any of your contracts. This often requires careful resource planning. The robust accounting systems will let you schedule out budgeted, or planned, hours throughout the course of the contract or contract period. This can be done at the individual level and can factor in headcount, expected paid-time-off, holidays, and a number of other factors to properly forecast and track you incurred cost.
  • Limitation of Costs: Certain contracts will require you to notify the government when you reach a certain point of incurred costs in that specific contract. Instead of having to manually track this, you can set triggers so that the accounting system alerts you when you reach these points.
  • Strategic Planning: As a business grows, there will be more contracts, more service offerings, and more divisions. It will become more important to closely monitor margins. It is also critical to monitor which contracts, divisions, and services are generating the most profit so that resources can be properly allocated.

These are just a handful of the items you will want to consider when evaluating your accounting system. QuickBooks is drastically cheaper than the other accounting systems mentioned in this article and pretty much any advanced or industry-specific accounting software. If implementing a new system, you will incur significant costs for the implementation itself and ongoing license fees. Your current staff might also require a lot of training under the new accounting system. But if you have grown to a certain size and complexity and QuickBooks is no longer meeting all of your needs, the long-term benefits of switching off QuickBooks may far outweigh the cost of the new system.

LRZ Consulting is a full-service outsourced accounting and bookkeeping firm specializing in the government contracting industry. We provide support for QuickBooks, Deltek CostPoint, and Unanet Financials. If you are looking for a free comprehensive analysis of your accounting system, please contact us here.

Passing your Pre-Award Survey – Segregating Direct & Indirect Costs

Over the past few years, we have seen a dramatic increase in the number of solicitations requiring a contractor to have an “approved accounting system”. A recent example is the draft Request-For-Proposal for the CIO-SP4 Contract, which requires contractors to maintain an adequate accounting system. We have also seen more and more large prime contractors pushing this requirement down to their subcontractors. For smaller contractors, this means that at some point, there is a good chance they will need to go through a Pre-Award Survey of Prospective Contractor Accounting System performed either by the DCAA, another cognizant agency, or an independent CPA firm. Although this may seem like a daunting task for smaller contractors, it is a manageable undertaking with proper guidance. Simply put, the review is going to look at whether your accounting system, policies, and procedures are designed and functioning properly to comply with requirements set forth by government contracting regulations.

To assist with preparing for a survey, we are going to review in a series of articles the Evaluation Checklist criteria on the Standard Form 1408 (SF 1408), which serves as a guide for helping you prepare for the audit. These articles are meant to serve as a starting point, not a master guide. If this is your first time through the audit process and you lack in-house personnel with expertise in this area, I would encourage you to seek out a consultant to help prepare for the audit. As we go through the Evaluation Checklist, we will also demonstrate a practical example for how to address each item in your accounting system.

In each article we will tackle one of the checklist criteria, and discuss the principles behind the criteria and how to begin putting processes in place and setting up your accounting system in order to meet the criteria. The checklist criteria we will discuss this week is:

2a. Proper segregation of direct costs from indirect costs

FAR 31.202 defines a direct cost as “any cost that can be identified specifically with a particular final cost objective”. For most contractors, the distinguishing factor between a direct and indirect cost is based on whether a cost is directly allocable to a contract. If a contractor employs a Subject Matter Expert, and that employee works on a specific contract and charges their time to that contract, the result is a direct cost of that contract. Alternatively, when that Subject Matter Expert takes vacation or performs administration functions, those hours can’t be directly assigned to any one contract, and is therefore an indirect expense.

There are two key components to bear in mind when properly segregating direct costs from indirect costs. The first component is establishing a method for the costs to be distinguished between direct and indirect based on the source document and any systems in place. The second component is how the accounting system is designed to segregate those direct costs. Most contractors will have some component of labor that is a direct cost. To properly segregate costs, the timekeeping system must allow for employees to record their time to direct charge codes as well as indirect charge codes. Similarly, purchase orders and expense reports should be designed so that employees can specify whether the cost is direct or indirect, and what contract the purchase relates to for direct costs. The second component to segregating direct costs from indirect costs relates to how the accounting system and chart of accounts is set up. The accounting system should have separate accounts for direct expenses vs. indirect expenses.

Putting the criteria into practice in your accounting system

A starting point for meeting these criteria is a properly designed chart of accounts. You want a numbering sequence for your chart of accounts that clearly distinguishes between direct costs vs. indirect costs, and allowable costs vs. unallowable costs. A common method for numbering your chart of accounts is as follows:

5000-5999: Direct Costs

6000-6999: Fringe (indirect)

7000-7999: Overhead (indirect)

8000-8999: General & Administrative (indirect)

9000-9999: Unallowable costs

This design allows for a clear segregation between the different types of costs. To take the example further, instead of having a general “Salary” or “Labor” account, you will likely have a combination of the following accounts:

– Direct Labor (5000 series)

– Holiday, PTO (6000 series)

– Overhead Salaries (7000 series)

– G&A Salaries (8000 series)

– Unallowable Labor (9000 series)

Note how each of these accounts should be within the first numbering sequence to properly segregate the costs. If you are using QuickBooks, you likely will want to classify your 5000 series as “Cost of Goods Sold” for the account type. This allows you to further build in the functionality of segregating direct costs and making a clear distinction between direct and indirect costs. QuickBooks however won’t allow for a further breakdown of account types where you could separate Fringe, Overhead, G&A, and Unallowable. All of those accounts will need to be set up in your chart of accounts as an account type of “Expenese” or “Other Expense”. You can however use parent accounts – for example you can create an account 6000 that is called Fringe Expenses, and then not charge to that account, but have all other fringe accounts as a sub-account of the parent 6000 Fringe Expense account. More robust accounting systems such as Deltek Costpoint & Unanet Financials will give you the functionality to classify an account as direct, fringe, overhead, G&A, or unallowable based on the pools and bases you set up within those systems, but that goes beyond the scope of what we will talk about today, and is certainly not a requirement to meet the checklist criteria being discussed here.

As a final note, it is important to keep in mind that with all the evaluation criteria, to pass the review you must do more than just set up the accounting system properly. Setting up different accounts for direct and indirect expenses is the first step, but there must also be policies and procedures in place, as well as systems and processes built around the accounting system to allow for proper segregation of costs. This requires building a timekeeping system that allows charging to proper categories of labor and specific contracts. In addition, this requires training personnel, specifically accounting personnel, so that they are familiar with the principles of government contract accounting, and can correctly distinguish between direct and indirect costs.

For example, if the CEO of a company is not billable on a given contract, but perhaps they spent their entire day speaking with the CO for that contract and managing their employees on that contract, the CEO may logically think that their time should be charged to that specific contract. This would not be correct though, as they are performing overhead and administrative functions that are not directly allocable to the contract, and should not be charged as such. Personnel must be trained to charge their time properly, otherwise the setup of the accounting software itself to segregate direct and indirect costs becomes meaningless.

Please send an email with any of your questions and look for future articles in the series. Click here to see our services for government contractor accounting.

How to Create an Effective Month-Close Process

You’ve worked hard all month processing transactions and invoicing customers, and now it’s time to produce the end result: a set of financial statements that management can rely on. Performing this month-close process is one of the most important (and most time-sensitive) functions of an accounting department, mainly involving higher-level accounting and finance personnel. With the right approach, it can be a smooth and timely process that also allows for value-adding analysis of the financial statements. Let’s explore some of the key components required for a successful month-close process.

Create a calendar and checklist

Closing the month can be daunting for an internal accounting department, but using a month-close calendar and checklist helps to properly plan, stay organized, and ultimately meet the target month-close date. Many departments aim to close each month ten to fifteen days after the end of that month. Timing varies by organization, but the information typically becomes outdated after fifteen days and doesn’t allow enough time to analyze or make proactive decisions based on the financial results.

It’s important to include any tasks that can be completed before the end of the month in your calendar. For example, manual spreadsheets or reports that take time to roll forward to the next month can be prepared in advance, allowing more breathing room to meet closing deadlines. Certain accounting tasks can also be done prior to the end of the month; record as many transactions as possible, and implement processes so most of your billing and accounts payable are done beforehand. While this isn’t always possible depending on your industry and billing cycles, it’s still important to evaluate all tasks and determine what can be done ahead of time to help with a timelier month-close.

When you finally reach the end of each month, have a timeline prepared for completing all remaining tasks (e.g. journal entries and balance sheet reconciliations) by your end goal. If there are various interdependencies in the closing process, it’s even more imperative to utilize your calendar to assign tasks and hold everyone involved accountable.

Develop flash and other ad-hoc reporting

Beyond performing as many tasks as possible before the end of the month, another way to alleviate the month-close time crunch is by stretching out the closing period. This can be done without hurting the business if proper flash reporting and other interim deliverables can be created in advance of a company (1) completing the full month-close, and (2) delivering statements to management and other key personnel. Examples of flash reporting include sales reports, job profit reports, interim payroll data, and collections trends. The key is to set up your processes so that the data in these reports is accurate and actionable, providing management with the information they need to immediately evaluate financial results without the final month-close statements. In return, management may allow a longer closing period.

Automate your processes

Accounting technology and applications have improved immensely over the past ten years, and with these improvements come new tools that enable automation to help simplify the month-close process. The tools that your organization can benefit from most will vary depending on the nature of your operations, the type of reporting requested by management, the volume of transactions, and a number of other factors, but there are countless tools out there designed to meet a variety of needs.

Build easy-to-use spreadsheets

Even with the most sophisticated accounting system and month-close applications, you’ll likely still depend on Excel spreadsheets. It’s essential to build these spreadsheets yourself so you can ensure they’re replicable each month, free of errors, and easy for a manager to review if needed. If you choose to use spreadsheets inherited from someone else, you’d have to review a number of formulas, potentially reformat the worksheet, and make a lot of manual changes that could easily be calculated using formulas if setup correctly in the first place. Take the time to build your spreadsheets correctly and you’ll be relieved you did when the month-close arrives.

Design the close to create value-added analysis

Creating value-added analysis may be one of the most important and often overlooked tasks of a successful month-close. Although closing the month results in an accurate and reliable set of financial statements, it shouldn’t end there. The process and resulting financial statements should be a mechanism for evaluating results, making informed decisions, and ultimately increasing the value and profitability of the organization. For example, your month-close package may include a Budget vs. Actuals report; what are you actually doing with that report and how is it helping your organization? The financial statements should facilitate discussions and assist management in making strategic decisions, not just highlight how much money was made. Efficiency and accuracy during the month-close are important, but the process should be built with the goal of value-added analysis in mind.

Evaluate your accounting system

One final consideration to make is whether your existing accounting system is meeting the needs of your organization. Implementing a new system is often time-intensive and expensive, especially for larger businesses. However, a new system could help automate some of the current time-consuming and manual processes. It’s recommended for accounting and finance departments to periodically analyze their accounting systems and determine whether it’s meeting the needs of their organization, or if implementing a new one should be considered. QuickBooks is a very powerful system, for one example. When used the correct way, it leads to an efficient month-close and excellent reporting. But at a certain volume, level of complexity, industry, etc. your business might outgrow it and need a different tool. So if you’re evaluating new accounting systems, keep the month-close process in mind; it’s vital to the overall accounting and finance function.

If you have any questions or need assistance with your month-close process, please contact LRZ Consulting.

Online Bill Payment Systems (part 2)

In the prequel to this post, we discussed traditional accounts payable and bill payment systems as well as their downsides. For part two, we’ll highlight an effective system for small businesses as well as common concerns people have when considering implementation. This example will follow one accounting system (QuickBooks) and one bill payment system (, but note that this process can be accomplished with a variety of platforms.

System and processes overview is an industry leader, having over $70B of payments processed through their platform. Users are required to pay for the subscription; costs include a flat rate and additional fees based on number of users/payments processed. For a quick overview of the process:

  1. Invoices get scanned, emailed, or uploaded into your “inbox,” at which point they can be coded by a bookkeeper or other member of your team
  2. The coded invoice is routed to a manager or the owner for approval and processed for payment
  3. initiates an ACH from the company’s bank account, or sends a check directly to the recipient on your behalf
  4. transfers the data to your accounting system (so you don’t have to enter any data in the accounting system manually)

An advantage of the platform is that it integrates with a number of accounting systems, including QuickBooks and QuickBooks Online. You can link your existing QuickBooks information (vendor data, terms, chart of accounts, customers/projects, etc.) to the platform, enabling all transactions entered within one system to transfer to the other. (Note this will vary depending on the system you are using; it may be an automatic process that runs in the background, or one that requires the click of a button when logged in.)

Common questions and concerns

Now that you’re familiar with the process, let’s address a few concerns we often hear from companies evaluating whether to implement a bill payment system:

1. “I’m concerned about security.”

The major bill payment platforms all have best-in-class security protocols, as well as SOC reports that are available to the public. More importantly, they have additional built-in security protocols related to logging in and making payments. We recommend using dual-factor authorization when logging in and submitting payments to enhance security protection – it’ll significantly reduce the risk of an attack on your server, or computer leading to fraud perpetrated through the platform.

2. “Some of my vendors only take checks.”

The online bill payment system eliminates the need to write checks yourself, but you can still use them as a payment method – the platform will just generate a check and send it directly to the recipient for you. So under this system you don’t have to handle checks yourself, but vendors can still receive checks if they so choose.

3. “My employees or management are not good with technology.”

The major platforms have very intuitive interfaces that even the least tech-savvy individuals can utilize. Most also have smartphone apps available, if you’re more comfortable using a handheld device versus a computer.

4. “I don’t want to pay for another subscription fee.”

The fees for most platforms are manageable, but you have to factor in the time saved managing the accounts payable function (which helps decrease headcount cost). If you outsource your accounting or bookkeeping functions, most firms will foot the bill for the platform because it’s more efficient for processing on their end. They may even have a discount on the subscription fees that can be passed on to your company.

5. “I need multiple people at my company to approve invoices.”

The major platforms allow you to add as many users as you need with any workflow to the system. Additional costs may be added based on the number of users, but they’re reasonable. You can give different levels of approval permissions to project managers, supervisors, division presidents, or anyone at your organization. If you want a specific invoice routed to four different people for approval, that can be done. Conversely, if you’re an SBO who inputs and processes everything yourself, you can follow a more simplified workflow and skip the approval process altogether.

6. “I don’t know how to integrate this with my accounting system.”

The service team performs the initial integration and can assist you with getting started on their platform at no additional cost. They also have a fantastic support team as well as a number of resources on their website to assist in making a smooth transition to their platform.

If you’d like to learn more about bill payment systems or have any questions, please contact LRZ Consulting.

Online Bill Payment Systems (part 1)

While it is always a good time to evaluate systems and look for efficiencies and process improvements, now more than ever it makes sense to consider a switch to an online bill payment system.

A traditional accounts payable function often looks like the following:

  1. A vendor invoice is received in the mail and entered in the accounting system.
  2. The invoice is stored in a folder until the payment is due.
  3. When payment is due, a check is printed from the accounting system.
  4. The check is then placed with the invoice and routed to management, who reviews the documents and sign the checks.
  5. Copies of the checks are made and stored with the invoices in a filing cabinet.
  6. Checks are placed in the mail and sent to vendors.
  7. Every few years, those invoices are put into storage and kept for five to seven years.

There is nothing inherently wrong with the above process, but with advances in technology and security, an online bill payment system can address most of the downside and inefficiencies associated with the above process. Conceptually, there are not many changes from the above outline when switching to an online bill payment platform. Rather, the platform allows for modifications and enhancements to the process which improve efficiency and add convenience for the personnel and management involved. Most importantly, it can save your team a significant amount of time and ultimately money.

The following are some of the issues with a traditional, paper-intensive bill payment process:

  1. Increased time & cost: while there will be a cost to use a bill payment platform, the savings in time spent performing these tasks will far outweigh the fee paid to use the platform. Later, we will dive into all of the ways an online bill payment platform can save you time.
  2. Increased risk of fraud: with a traditional process, a business owner or management may give a signature stamp to the accountant at the company. This saves the owner time, but makes the company susceptible to fraud, especially if there is only one person in the accounting department performing all functions related to recording and paying bills.
  3. More storage requirements: The above process is often still done with actual paper, which not only takes up extra space in the office but will then require the company to pay for storage to keep old boxes until they can finally dispose of the records many years down the road.
  4. Lack of convenience: The traditional process requires the person entering bills and the person signing checks to physically be in the office. With a move to more of a remote workforce and the burden of a busy schedule for business owners, the ability to work from any place at any time is becoming increasingly important. Unfortunately, the traditional process often does not allow for remote processing.

The ideal system and processes will depend on what accounting system you are using and can manifest itself in a variety of ways. Some more robust accounting systems – think SAP or NetSuite – especially where the accounting system is part of a larger ERP, allow you to perform most of the processes discussed above within the accounting & ERP system itself. For example, actual invoices can be scanned and stored within the accounting system, then routed to a manager for electronic approval, and exported into a CSV file that can be uploaded into your bank’s portal, where payment is ultimately approved by a CFO or other executive. This type of system would typically apply to larger businesses. For the smaller businesses, an optimal bill payment platform would typically be separate from the accounting system, such as QuickBooks Online or QuickBooks Desktop, but would integrate directly. In Part II, we are going to discuss how this optimal system would function.

Accounting Wishlist for Business Owners

With 2020 upon us, we are looking at a few areas within the accounting and finance function that can be critical to the success of a small business. Sometimes these areas are being overlooked or the functions simply aren’t being performed. If that is the case, we hope you’ll take some time in the new year to address these areas and think about how you and your organization can improve.

Budgets: If your company has never budgeted before, it is something worth considering for the new year. As a business owner, you have certain plans and goals for the business, and it is important to track your progress during the year against those goals. This not only gives you the piece of mind of knowing where you stand financially, but more importantly it can help to address areas of the business that are performing well, areas that need improvement, and costs that could potentially be cut.

It’s also important to make sure that you aren’t budgeting just for the sake of saying that you did it. Budgets, and the comparisons of actual vs. budget, should be meaningful. You should change or adapt your budget if there are significant changes that warrant doing so. You should also look for important trends, whether positive or negative, when evaluating your actuals vs. budget.

Internal Controls and Security: Fraud continues to increase in frequency each year, and the ways in which it is committed continues to become more complex. As the business owner, you should evaluate your internal controls and make sure that there are no significant weaknesses that could make your business susceptible to fraud. A few quick items to considers:

  1. Is there one person in the organization that performs various duties, including handling cash, that could have an opportunity to commit fraud?
  2. Are you reviewing bank reconciliations each month, and receiving the bank statements directly from the bank?
  3. Do electronic transfers require multiple levels of approval for certain dollar thresholds?
  4. Do employees have a way of anonymously reporting fraud or potential fraud?

These are just a few items that should be considered. Ultimately, you need to understand your processes, both within operations and the accounting function, to identify where weaknesses might exist. There are comprehensive checklists available, and you can also consider having colleagues or external parties provide input.

IT and Security Controls: This one isn’t necessarily specific to accounting, but it is an extremely important area to consider. Like fraud, security breaches and cyberattacks continue to increase and become more complex. At this point, every business should carefully consider the implications of their IT and security structure. If you don’t have IT personnel in-house, you probably need a third-party consultant who has expertise in IT and security to help set up or improve your system and controls. Things like anti-virus, dual-factor authentication, and back-up procedures are imperative. But in addition to that, you also need to take time to educate your employees on best practices as it relates to security. Employees need to be cautious when opening attachments or initiating transactions that are requested by email. Employees should also be using strong passwords and changing those passwords on a periodic basis, without just updating the last character in the password.

Timely financial reporting: As a business owner, you need to be able to adapt quickly to changes in the marketplace that impact your financial results. If you aren’t getting timely financial statements on a monthly basis, reacting to those changes can become much more difficult. You don’t want to find yourself halfway into the year before you realize you had an unexpected loss in the first few months of the year. At the latest, you should have financial statements provided within thirty days of month-end. Otherwise you are reacting late, and you aren’t using financial reporting as a tool to improve the business and increase profitability.

Automation: Technology continues to improve and can be utilized to automate processes. This can save your team time in performing various functions, which ultimately means saving money. It can also improve accuracy, speed up the month-close, and can free up employee’s time to spend on more value-added activities. You can start by working with accounting personnel to brainstorm a list of activities that are the most time-consuming. Using that list, you can try to identify processes that could potentially be automated and then research options for how the automation can be accomplished. It could be utilizing a new application or software program that automates what used to be a manual process. And the automation doesn’t have to be overly complex. Things as simple as processing checks can be improved with new technology; there are now applications where you approve bill payments online and the vendors providing these applications will physically write and mail the checks on your behalf for a nominal cost. This not only saves time but can also reduce the risk of fraud and help you move to a paperless office.

While there are many other areas to focus on and improve, we hope this list helps you identify some improvements you can make in the new year.

Selecting an Accounting System – Add-on Applications and System Features

In this series of articles, we are going to offer some practical advice for how to build a best-in-class accounting and finance function. The first few articles will cover accounting system selection. This article will specifically touch on features and add-on applications, as it relates to selecting an accounting system.

Selecting a new accounting system serves as a perfect time to evaluate your internal policies, procedures, and processes. Depending on the industry and nature of operations, companies have drastically different needs as it relates to transaction processing and financial reporting. Some companies in the government contracting industry have $20 million in service revenue but have less than ten customer invoices per month. For these companies, because of the regulatory requirements and need to track individual projects, one of the most important features within the accounting system will be integration with a timekeeping system and automatic calculations of labor allocations based on timesheets. If the timekeeping system is integrated and the information automatically flows to customer invoices, you can save hours or days in processing time and calculating invoices each month. On the other hand, it is not important for a company like this to have a process that automates sending invoices to customers. The company will only be sending a few invoices each month, so this feature would have minimal benefit in terms of time saving. Meanwhile, a software company with $20 million in annual revenue that has a recurring revenue model may have 500 customers that are billed each month. Their customers likely are billed based on contracted prices for software, and therefore integration of timekeeping would not be essential, but an automated invoicing and revenue recognition feature within the accounting system would be of significant importance. Imagine the time saving if instead of manually generating 500 invoices each month and sending each of the invoices to a customer, you had a system that automatically generated those invoices each month and emailed them to customers.

The features within different accounting systems are going to vary, as well as the quality of each of those features and the ability to integrate them with third-party applications if needed. Therefore, you first need to identify what are the most important and most time-consuming processes for your company, and then see how the accounting systems you are evaluating addresses those needs.

Another thing to consider is the increasing prevalence of third-party applications that integrate with accounting systems. QuickBooks Online has built out an entire “app store” because there are so many third-party applications that can be fully integrated to meet the needs of various customers. These applications can integrate your payroll, import credit card and bank transactions, manage inventory, automate financial reporting, and perform a host of other functions. Some robust accounting systems may have inventory modules and various other modules that the vendor has built out, which may be important for your accounting function. But because there are now so many applications that can be fully integrated into various accounting systems, you may find yourself able to build a much better system by using a simple product like QuickBooks or Intacct and customizing those systems with a variety of third-party applications, as opposed to if you used a “high-end” accounting system with various modules already built into the software.

If you go the route of using third-party applications, the following are some common areas and processes that you might consider using an application for:

  • Timekeeping systems: If a company needs to record labor costs by project or job, you need your employees to record their time appropriately. There are tons of online timekeeping applications that can integrate with accounting systems so that you don’t have to manually record the labor costs by project or job. These systems can also be set up so that proper approvals of time by supervisors are in place. And many of the applications now let employees access their timesheets on their phones so that they can go in to the system any time and from anywhere.
  • Bill payments: Applications for vendor invoice and payment processing can save your organization significant amounts of time on a daily basis. Many of these applications will scan your vendor invoices and give you a clean interface to code the transactions and then import into an accounting system. You can also then approve invoices for payment, and these applications will process the payment so that you don’t have to physically prepare checks or initiate ACHs anymore.
  • Customer invoicing: As discussed above, this is especially important for companies with recurring revenue models or with a significant amount of small dollar-value transactions with customers. There are generic applications where you can simply set up a customer invoice and have it billed automatically to a customer each month. There are also a lot of industry specific systems that integrate with the operational side of a business. For example, if a company provides limousine rides, they may have a booking and dispatch system that tracks where their limos are, which customers have booked rides, and the pricing for those rides. That system may be integrated with an accounting system for revenue purposes, or you could run a system like that as essentially a sub-ledger for revenue and accounts receivable.
  • Inventory management: If the company runs a business that requires inventory, then this will be an important component. The application or inventory module will vary depending on the nature of the inventory. For example a company selling high-dollar value items with no components has different needs than a company selling small items with tens or hundreds of components in each finished product.
  • Expense Reporting: Many applications exist now that allow you to take a picture of a receipt and have that expense then flow into the application, where you can code the expense and then seamlessly export those transactions into the accounting system.

We hope this information can help serve as a starting point in your evaluation for potential accounting systems. It is a critical decision that impacts almost all areas of your accounting and financial reporting function. Make sure you speak to as many people as possible as you start to evaluate your options. We recommend talking to people both inside and outside of your industry, to personnel inside and outside of your internal accounting department, and to unbiased service providers. Read reviews, take demos, and take plenty of time before you make a decision so that you have the best possible foundation for building your accounting and function.

Selecting an Accounting System – Implementation

In this series of articles, we are going to offer some practical advice for how to build a best-in-class accounting and finance function. The first few articles will cover accounting system selection. This article will specifically touch on implementation issues as it relates to selecting an accounting system.

Three key considerations when thinking about accounting system implementation are cost, complexity, and timing. We have discussed cost and pricing in a previous article. As mentioned, it is important to factor in the cost of implementation into a total-cost evaluation when choosing an accounting system. The following will discuss the other two key considerations:

1) Complexity

The complexity of an accounting system implementation and transition can vary significantly based on the choice of accounting system, the level of customization desired in the new system, and the experience of your accounting team and any external parties involved in implementation. An implementation of QuickBooks with minimal customization and few add-on features would require limited resources. When you move to more robust systems such as Oracle and NetSuite, the implementation will require a much more sophisticated team and there will be a long list of considerations that will need to be made. Your team, and any external parties, will need to decide on the level of customization of the software, which optional modules will be used, and how each module will integrate with your accounting processes. The more customization and the more modules that are used, the more complex the implementation will be. This may require significant outside help, and the associated costs of that outside help, and will likely require more time for both the implementation and training with the new system.

One key consideration related to the complexity of the implementation will be what outside parties your team uses to assist with the implementation. Assuming outside expertise is needed, your team will likely face the decision of using consultants from the software company or using outside consultants. In some cases, we have found that using an implementation and integration team from the software company itself may not be the best choice. While that team of course knows the software extremely well and understands how things work behind the scenes, they may have more of a cookie-cutter approach to implementation. Sometimes third-party consultants have more experience in different operating environments because they have worked with so many different companies. They may have a better idea of what modifications to the software work best for a given company and what areas may cause issues.

2) Timing

If you are making your decision about accounting system selection at the inception of the company, timing is not a key consideration. You will want to have your accounting system live by the time the company begins its operations, or as close to that time as possible. If the company has been in existence and you are evaluating new accounting systems, timing is a much more important factor. For the best possible transition, you will likely want a cut-off date that is the same as your new fiscal year. If you follow a calendar year, then best practices would be to begin on the new accounting system January 1st. This ensures that for any given year, you have your full accounting records and reports in one system. If you choose October 31st as a transition date to the new accounting system, then for that transition year you will always need to pull reports from different systems to have full financial and accounting records for a given year. That is not to say that a mid-year transition date is not feasible, it just adds a little more complexity and may not be as clean. If there are important business reasons for switching mid-year, it is certainly a viable option.

Another important consideration regarding timing is to provide ample time for implementation, training, and side-by-side processing in both accounting systems. If you choose January 1st as your transition date to the new accounting system, that doesn’t mean that implementation should be physically done on or near January 1st. You should do the implementation a few months before so that you:

  • Have enough time to set up the new system, transfer data, build your new chart of accounts, etc.
  • Provide time for employees and other parties to learn the new accounting system, build new processes, customize the software, and create reporting functions in the new system.
  • Run the old and new accounting systems side by side to ensure accuracy and identify any issues with the new software and related processes.

The worst thing that could happen is to for your company to reach a go-live date in the new accounting system and have either the software, personnel, or processes not ready and fine-tuned. Then you will find yourself struggling with delays in the month-close process that will frustrate both the accounting and finance teams, as well as the management team that is relying on timely financial information. By building out an appropriate timeline for implementation, training, and other key dates, your team can be prepared when the final switch to the new accounting system is made. One final note on this topic is to make sure you consider how long you will have access to the old accounting system and records. You will likely make backups of the old accounting records, but if you need to be able to physically go in to the old accounting system for audit purposes, researching vendor records, or a variety of other reasons, your team should consider how long you want to have access to the actual accounting system as opposed to just backup records which may be harder to use and to research items you may need.

We hope this information can help serve as a starting point in your evaluation for potential accounting systems. It is a critical decision that impacts almost all areas of your accounting and financial reporting function. Make sure you speak to as many people as possible as you start to evaluate your options. We recommend talking to people both inside and outside of your industry, to personnel inside and outside of your internal accounting department, and to unbiased service providers. Read reviews, take demos, and take plenty of time before you make a decision so that you have the best possible foundation for building your accounting and function.

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