We talk with finance and accounting leaders and operators every day. The size, structure, responsibilities, and priorities of their teams can vary pretty dramatically depending on the business. And those differences can create some interesting and unique challenges. But overall, it’s definitely true that finance and accounting pros share a lot of experiences and common frustrations. Here are eight takeaways from conversations we’ve had just in the past few weeks.
1. Sports teams, leagues, and entertainment venues are crazy spider webs of accounting complexity
These types of businesses are fascinating use cases for accounting automation. Let’s look at a major league baseball team (and the league overall) as an example:
- First, the volume of transactions is pretty insane. Did you know that a single baseball stadium like Fenway Park sells approximately 1.4 million hot dogs per year? That breaks down to 20,000 hot dogs per game. And while hot dogs are obviously the number one thing to eat at a baseball game (it’s a fact), they are just one of dozens of food and beverage options at a park like Fenway.
- Then you consider all the other types of products and transactions: tickets, merchandise, raffles, special paid experiences, and even exclusive streaming services.
- Then you consider all of the different systems and forms of payment at play: physical ticket windows, online and mobile ticket apps, vendor POS systems taking credit card credit cards and smart watches/digital wallet payments, mobile food ordering systems for the over-priced seats, and – oh yeah – cash.
- And if you’re a league like the MLB, Fenway is just one of 30 parks. And one of those parks is in Toronto, Canada. And then there are the minor league teams and stadiums. And then there are all of the recently added international games being played in Mexico, Japan, and more countries. Don’t forget about marketing and advertising, and, and, and… The list of complex accounting scenarios goes on.
- Stadiums like Fenway also host dozens of concerts and other for-profit and non-profit/charitable events throughout the year. When something like artist merchandise factors in, it adds revenue recognition nuances around revenue and profit sharing, etc.
- Interestingly, one thing that sports stadiums don’t see a lot of are returns. Makes sense. How many times have you seen someone try to bring back a hot dog, or a kid turn away a jersey with their favorite player’s name on the back of it? You’re more likely to see an old man try to send back soup at a deli.
2. Other rev rec and automation tools can’t figure out the data volume issue
Innovation is exciting and it makes for better headlines. So we spend a lot of time talking about Leapfin features like Dynamic Linking and Universal Accounting Records (check those out in our 2-min explainer video or new interactive demo). We honestly didn’t think it would be such a big deal that Leapfin can easily handle high volumes of monthly and annual transaction data. We’re talking from tens of thousands to millions of rows a month.
But finance and accounting teams are telling us that when they vet other providers in the space (including bigger “name brand” companies), they’re frustrated to learn that those tools struggle to handle customer data for modest volumes like 100,000 orders per month, or even 200,000 total orders a year.
Sometimes we get jealous of the name recognition and awareness the big industry incumbent providers have. But we definitely aren’t jealous of their outdated architecture and technical limitations.
3. The internal build trap is real
Companies are over-estimating their internal engineering resources. This isn’t an indictment of their engineering teams’ knowledge, talent or abilities. It’s really that company leaders are under-estimating the time, effort, and precision it takes to create a purpose-built solution – when business-critical stakes on the line – like Leapfin. To see how a company like SeatGeek navigated the build vs buy conversation internally, read this post.
So we’re seeing a pretty interesting (and quite gratifying) trend. Of the companies who demo Leapfin and decide they can build an adequate solution themselves, 95% of them pop back up on our schedule in six months for another conversation. And there’s always more people in the room for these new calls.
4. Inertia – also real
Here’s your daily physics refresher: inertia is that famous Newton law: an object at rest tends to stay at rest (or an object in motion tends to stay in motion) unless an outside force acts upon it.
What we didn’t know at the time was that Newton was actually talking about business decision making.
Kidding, obviously. But the tendency of objects, people, teams, businesses, etc. to resist change in their current state of motion is very real. Here’s what this sounds like from finance leaders we talk with: “We’ve always done it like this.” And “we’ve made it this far with spreadsheets…” It’s still surprising how these attitudes can co-exist with today’s mantras around innovation and having a “growth mindset,” etc.
5. Reconciliation is consistently a top 3 pain
We ask accountants, “if you could snap your fingers and make a revenue accounting problem disappear, what would it be?”
Reconciliation between payment processors and internal systems is consistently a top three pain from accountants, right alongside revenue recognition and creating journal entries. It’s felt acutely by accounting teams at subscription companies, but it’s a common pain regardless of company type, business model, or team size. When businesses grow, and/or if they evolve their revenue strategies, the number of payment processors and data sources increases. It doesn’t matter how many hands or hours a team has, when you rely on manual processes like downloading reports and using VLOOKUPs and queries in Excel to ensure the data is accurate between multiple systems, it’s just plain difficult.
Leapfin’s Dynamic Linking feature stands out as a major differentiator because it solves the time-consuming and often complex challenge of reconciliation. Dynamic Linking automatically reconciles and links transaction data from disparate systems, allowing Finance and Accounting Teams to review which transaction events are linked to the invoice so they can trace the entire order to cash journey.
6. Errors from manual process are the worst kind of nightmare
As companies grow, their revenue transaction data grows. When that happens, manual processes – like aggregating and standardizing data in Excel – tend to break. Accountants at high-growth companies face vigorous weeks where they may spend 20 hours just on manual data adjustments. But errors are part of the job. Even a smooth month will see some errors.
But Finance and Accounting teams tell us the biggest problem with errors from manual work is that they are inconsistent and unpredictable. At least when a system produces errors, it tends to produce the same type of error each month. When it’s a predictable error, teams know where to look and have a general sense of the scope of error and process to fix it. But manual errors can pop up anywhere, and because of that, teams will spend hours searching for a needle (or multiple needles) in their haystack of revenue transaction data. Nightmare scenario.
7. Leapfin’s Universal Accounting Record gets a legitimate “Wow!”
This is one of those simple things that shows how Leapfin is built for accountants. Leapfin’s Universal Accounting Record takes all of a company’s transaction data – standard attributes, custom fields, and metadata – and consolidates it into a single, simplified record. We call this a “wow” moment because of the reaction it gets from accounting teams. The ability for an accountant to open up an invoice and see all of the transaction attributes that are associated with it is huge. Sometimes it’s the little things that make the biggest difference.
8. More companies pursuing daily closes for faster insights
In pursuit of growth, more companies are moving from monthly closes to daily closes. They’re doing this to provide executive leadership and departments like sales, marketing, and product with real-time revenue insights. It’s an adjustment that seems to be happening fastest among seasonal businesses, as faster insights are crucial for agile decision-making. That said, there are very few businesses out there who don't have "growth" at the top of their priorities list.
Take a look at these awesome, growing businesses and see how Leapfin is helping them achieve their goals.
