It’s All Clicking for Wayfair
Welcome to another edition of the Corporate Finance Digest. Each week, the Lola team scours the internet to find the news and content that you need to know about.
So, what’d we learn this week? For starters, Tesla is in some serious financial trouble. We also found out that Wayfair, despite being a newcomer to the Fortune 500 list, is struggling to find profitability.
Speaking of companies in trouble and finding profitability, we found a Fortune piece about how companies are burning through cash now faster than ever before.
There’s plenty more to learn…
Musk Says Tesla Will Be out of Money in 10 Months Without 'Hardcore' Changes
Full disclosure: we’re big fans of Tesla here. They make a great product. Unfortunately, their great product is burning through cash so fast that despite recently raising $2.7 billion, they’re going to be out of money in just a few months.
In Q1 of 2019 alone, they burned through $702 million. So, things aren’t great from a financial perspective.
Musk’s solution? He plans to review “all expenses of any kind anywhere in the world, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account.”
It's All Clicking for Wayfair, a Fortune 500 Newcomer
Things are good at Wayfair. The company just landed on the Fortune 500 (coming in at number 446). Revenues are growing by 40% each year. They have 16.4 million active customers.
There’s just one problem: profitability. Like Tesla, Wayfair is burning through cash. A lot of it. They lost $500 million last year.
Despite that, their stock price continues to climb. Investors seem to believe in Wayfair’s ultimate vision, which is to revamp every aspect of buying home goods -- from product discovery to delivery.
Want to know how Wayfair plans to find profitability? Us too. Read the story from Fortune.
Analysis: The Tech Superstars Never Went Through Cash Like Today's Big Burners
While we’re on the topic of burning through cash, let’s look at the cash burns of the big four tech superstars when they were in startup mode. The companies we’re looking at are: Google, Amazon, Apple, and Facebook.
Here are their total cash burns before finding stable profitability:
- Amazon burn: $859 million over five years.
- Google cash burn: Zero
- Facebook cash burn: $143 million over 2 years
- Apple cash burn: Zero
Pretty impressive. Today’s big burners -- Tesla, Uber, Lyft, and Snap -- are burning through cash 20x faster than the original four. That number is even adjusted for inflation.
We Asked Top Remote Teams How They Handle Finances. Here’s What They Said.
Okay, enough about cash burning. How about some financial management from the top remote teams? Remote work is becoming more popular by the minute. In fact, 40% of companies now offer employees the choice of working remotely.
So what are the big things that make these remote teams work so well?
- Transparency - Not just with communications, but with company finances. Teams like Buffer are 100% transparent with finances.
- Automation - Most remote teams use automation and keep their finance teams small.
- Democratize expenses - Give everyone easy access to expense things, but make sure you have total control over what they’re expensing.
Give this article a read if you have any remote team members.
Think Your Company Isn't Losing Money To Expense Reimbursement Fraud? Think Again
Bad news - Last year, a total of $7 billion was lost to occupational fraud. 15% of that came from employees falsifying expense reports. Here are the most common ways employees falsify expense reports, according to Emburse:
- Overstated expenses - Employees simply expense more than the total cost of their purchase.
- Personal expenses - It’s not uncommon for employees to just expense personal purchases as if they were something needed for work.
- Multiple Reimbursements - Some employees will even submit one thing multiple times.
- Fake Expenses - Employees have been caught completely fabricating expenses. There are even websites that will create fake receipts to make it easy.
Luckily, there are also ways you can prevent expense reimbursement fraud. Emburse has all of the tips on their blog.
Business Intelligence: A Life Hack for Today’s CFO
Typically, we try to avoid articles about “hacks” because they’re usually just a quick fix, but this one from CFO.com is much more than a quick fix.
You’ve likely heard time and time again that the CFO role is evolving. You’re probably experiencing it in your job already. The role is moving from a job based on accounting to one based on business intelligence (BI).
As a CFO, BI can help you in three main areas:
- Finance Operations and Reporting
- Transaction Execution
- Performance Improvement
What does that all mean? Well, you’ll have to read the article from CFO.com to find out!
That’s everything I’ve got for you this week. But I’m curious, what did you read last week? Find Lola on Twitter and let us know!