When SaaS or subscription companies hit the revenue goals around Series B, processes that got them to that stage start to break down. I had the chance to speak with Peter Nesbitt, director of finance at Bitly, about how they knew they had to make a change to move off Quickbooks, when they decided to do it, and what upside they leveraged from upgrading to Sage Intacct for cloud financials. They found some big business value by:
- automating the order entry out of Salesforce.com into Sage Intacct, so that they automatically generate invoices and collections which resulted in 6 months of an additional runway,
- automatically entering journal entries with dimensional reporting at the departmental level which reduced their close from four weeks down to one week, removing $200,000 of cost, and
- automatically performing revenue recognition, enabling real-time dashboards for the executive team
David: What were some of the things your company/organization was struggling with prior to Sage Intacct?
Peter: The two things Bitly struggled with before Sage Intacct were revenue recognition (rev rec) and reporting. We used Quickbooks before switching to Sage Intacct. Since Quickbooks doesn’t do rev rec, we used Excel to calculate revenue recognized as well as deferred revenue. It was very challenging to track invoice changes or credit memos across 800 paying customers and not check on whether SFDC was correct. The reporting tools in Quickbooks were very limited. I could export a P&L and balance sheet, but everything else was non-existent or challenging to report on. Now with dimensions in Sage Intacct, we can do reports, such as P&L by department or location. Also, we can upload budgets to report on actual versus budget. Finally, revenue-related reporting, such as deferred revenue forecasts and revenue by the customer is also very helpful.
David: How has switched to Sage Intacct helped your company improve performance?
Peter: As I mentioned above, we used Excel to calculate the revenue recognized and the deferred revenue balance each month. It was a very time-consuming and error-prone process. With Sage Intacct, each invoice is entered with the starting and ending date of the revenue and then Sage Intacct does all the calculations down to the invoice level. This granularity ensures that each customer is being invoiced correctly and we are recognizing revenue correctly. The time and effort saved through superior technology like Sage Intacct have allowed us to continue to scale efficiently. Further, the accuracy around invoicing and revenue reporting has enabled Bitly to feel confident in the numbers we report as well as in the cash we expect to collect. Since 80 percent of all business failures are related to cash flow, visibility into cash helps Bitly continue to build on its industry-leading link management platform.
David: When thinking about the processes you’ve streamlined since switching to Sage Intacct, what are the estimated time and cost savings through these improvements?
Peter: We have seen huge time and cost savings just from the rev rec and reporting piece. First off, our monthly close has moved from four weeks down to one week. Also, we save about two days per month on rev rec and one hour per day for other reporting, for over 400 hours saved between two accounting team members in a year.
David: What does the increased financial and operational visibility provided by Sage Intacct mean to your company?
Peter: With improved accuracy around rev rec, we better understand the projected cash flows to the company. This has given us confidence in spending cash in other areas of investment like technology and people. With dimensions, we were able to do department budgets empowering managers to understand spending across categories. For example, now we can give specific budgets for software and T&E to each department, like engineering or product. Sage Intacct has enabled us to tighten up expenses, identify opportunities for savings, and provide transparency to the executive team on expenses and budgets. We also implemented the Sage Intacct -to Salesforce integration, which now gives real-time insights to our sales team into invoices and aging customers, which empowers them to identify churn risk by lack of payment.
David: What other business applications have you integrated with Sage Intacct?
Peter: We have integrated with Anytime Collect and Salesforce. With integration with Anytime Collect, we have improved our AR dramatically while cutting our AR staffing time in half. We implemented ATC in December 2016, we were able to cut DSO in half and improve CEI to over 75% from 50%. This led to a change in operational cash flow of additional months of the runway which was like bridge funding but without any dilution in equity or additional liabilities. With the Salesforce integration, we are having better communication with the sales team while cutting our staff time to 10% less. Also, removing manual invoicing processing reduces human error in the quote-to-cash process.
David: How has Sage Intacct enabled your finance team to contribute to any ongoing business and organizational improvements?
Peter: By switching from Quickbooks to Sage Intacct, we are definitely more audit ready in accordance with GAAP compliance. Sage Intacct tracks changes in transaction level and offers options to attach documentation for the backups. Also, Sage Intacct automates billing and revenue reconciliation which is a huge benefit for SaaS companies. Intacct has overall improved our financial accuracy and controls.
David: How would you describe the overall benefits you’ve seen from using Sage Intacct?
Peter: Beyond the improvements already mentioned in terms of improved collections, improved quote-to-cash, improved budgeting, more accurate financials, and improved forecasting, Sage Intacct has let us scale the business without additional headcount. We expect to easily double in size without requiring another finance headcount, where we would have certainly needed more employees if we had stayed on Quickbooks, saving us $200,000.
Peter and the Bitly Finance team have a great story to share, and Bitly continues its leadership in link management. Using Sage Intacct for their cloud financials has increased cash flow through automated order entry and billing, given collaborative consciousness to the executive team in decision-making, and sped the financial close and reporting for accurate views on valuation and SaaS metrics.