CFOs Shouldn’t Try to ‘Do Everything Better’By Rebecca Morrison, published on Jun 17, 2019
It’s time for the Weekly Financial Digest! Each week, the Lola finance team scours the internet to find the news and content that you need to know about.
This week, we’ve got:
- Advice from Gartner on future-proofing your financial tools
- How to calculate Total Contract Value (and why you'll want to)
- An update on the latest IPOs (hint: Slack's is coming up).
- Plus a lot more!
Enough with the intro, here’s the content:
Key Considerations for Future-Proof Financial Applications
According to a discussion at the Gartner CFO & Finance Executive Conference, if you’re looking for new financial software, you shouldn’t choose the tool that gives you the most cost-savings. You also shouldn’t choose the tool that gives you exactly what you need.
Instead, you should choose a tool that has the basic functionality of what you need now, and also gives you the potential to innovate for years to come.
When you’re trying to find a tool that will future-proof your finances, make sure that tool has a plan and the capabilities to incorporate AI and machine learning Those technologies are going to change, if your new software doesn’t have a plan for it, you’ll lose out.
Effective CFOs Don’t Try to ‘Do Everything Better’
More news from Gartner: CFOs are spending too much time doing things that should be handled by someone else. If you want to become a better CFO, you have to focus your time on personal effectiveness.
That essentially means that you need to focus more of your time on three areas:
- Act as a strategic partner to the CEO and board
- Exhibit a strong customer orientation
- Stay connected to business performance
It goes without saying that a CFOs job comes down to more than just those three things. But, if you can find time to prioritize those three areas, you’ll be a better CFO.
Total Contract Value: Why It’s Important and How to Calculate It
Profitwell says that Total Contract Value (TCV) is one of the most overlooked, but useful, SaaS metrics. Once you figure out your TCV, you’ll be able to make your sales more efficient, lower your marketing costs, and improve your revenue predictions.
Put simply, TCV measures how much value a contract is worth once executed. It includes any recurring revenue and all one-time charges like professional service fees, onboarding fees, etc.
The formula is simple too: TCV = (Monthly Recurring Revenue * Contract Term Length) + Contract Fees.
TCV is different than LTV because it’s based on actual contract commitments rather than projections.
Read the full post from Profitwell to learn everything about LTV.
4 Limitations of the Three-Way Match You Need to Consider
News from Appzen: the three-way match is outdated. If you’re not familiar with three-way match, it’s a way to cross-reference invoices, purchase orders, and receiving documents before issuing payments.
There are a few problems with this system:
- The three-way match can’t check multiple data points. It can really only check price and volume.
- The three-way match doesn’t confirm that services were actually performed
- The three-way match still leaves you open to fraud (just ask Facebook and Google).
Instead, Appzen says that you should be using STAR Match to verify accuracy of documents and transactions.
Want to learn more? Click here to read the full article.
Picking the Right Accounting Software for Your Company
No need for a lengthy intro to this one -- it’s all about accounting software. Pleo, the company that published this blog post, narrows accounting software down to their top four choices:
- Xero - A cloud-based tool that handles almost all accounting tasks for small to medium businesses. They also have a marketplace for finding accountants. It’s rates as a 4.2 out of 5 stars on G2 Reviews.
- Sage - This company offers accounting software for small, medium, and large businesses. G2 rates this as 4.2 out of 5 stars too.
- Quickbooks - No doubt you’re familiar with this one. It does everything most accounting pros need. G2 gives it a 4 out of 5.
- Microsoft Dynamics GP - The benefit of this tool is that it easily integrates with all other Microsoft tools, but it’s only rated a 3.5 out of 5 on G2.
Need more info on these tools? Read the full post.
This Week in IPOs
It’s pretty quiet in the IPO-world this week, but Slack is going public on June 20th. Slack is going with a direct listing, rather than an IPO because they aren’t releasing new shares.
The company isn’t profitable, but they are growing. Year-over-year growth is 67% for Slack, but growth is also slowing. It’s anyone’s guess how this one will go.
Last week’s IPOs went pretty well. Crowdstrike’s stock shot up by 70% and Fiverr’s increased by 45%.