Finanace, Technology, Results!

Posts Tagged ‘CFO’

State Sales & Use Taxes – Are You Sure You Don’t Have a Liability?

October 28, 2011

Based on what I am reading lately, more and more states are taxing cloud-based products and services.

The interesting part is that if your business provides or uses cloud-based computing, you may already have a liability that you may not be aware of. Not knowing what you don’t know is a very dangerous situation and can lead to unrecorded liabilities and related penalties and interest for businesses.

When a taxing authority decides to audit your business, they have the benefit of 20/20 hindsight and are not shy about being liberal as they interpret the law and calculate the tax bill.

You see, when it comes to collecting and remitting sales and use taxes to the state, it is the seller who is responsible – literally. If your company sells something that is taxable and fails to collect and remit the tax, the state will assess the tax, penalty and interest to you. You can claim that it is the end user’s responsibility to pay the tax but you will have to collect from them!

The ability of a state to assess sales and use taxes is dependent on nexus: where a business has a physical presence. But when it comes to the cloud ― where services are sold to customers who may access them anywhere from servers located who-knows-where by companies that may be headquartered anyplace ― determining nexus, and the liabilities that go with it, is anything but straightforward.

The state of New York ruled that nexus is determined by where an application is used, not where it’s hosted. This has created something of an “economic nexus” that changes everything for the provider/seller and the customer.  “Out-of-state businesses establish nexus “when making sales through an agreement with a person located in that state and the in-state person refers customers to the out-of-state business through a website link” according to a senior tax manager at a national accounting firm.

This is a complex issue that is still evolving but if you use any cloud computing services such as Salesforce.com, Netsuite, QuickBooks on-line, or a third party hosting services, you could be incurring a liability for sales & use tax. If your business provides a cloud computing solution, you could be liable to charge, collect and remit sales & use taxes.

As the saying goes, “Forewarned is Forearmed” so now that you know what you don’t know, you can at least ask the right questions and make sure that you don’t get surprised by a large tax bill sometime in the future.  Good Luck!

Tags: , , ,
Posted in Advice | No Comments »

Is Another Bubble About to Burst?

October 20, 2011

I don’t know about you, but I’ve started shaking my head over recent valuation trends and terms from venture capital – especially in Silicon Valley.

Some startups in the “hot” sectors are getting insane valuations based on projected revenue!

Hold on here, I just had a de ja vu moment – I’ve been here before… let me see. It was 1999 – 2000. I remember flying to Boston and New York for a two day visit to two venture funds and a private equity group to raise a mezzanine round of financing prior to the IPO of a client. My task was to get commitments for twenty million. These were two funds that we had met with several times and we knew that they were very interested in our space. Well I was successful times three – I got commitments for up to sixty million and spent no more than four hours with each group!

I remember flying home to Utah and shaking my head, wondering how I just accomplished what I had done. Now I remember what I learned that time around – there was no rationale around valuation or investment criteria. I’ve also recalled the aftermath of the bubble bursting – the so called “nuclear winter” of raising capital. No one was making new venture investments and a lot of businesses folded.

Lest we be forced to re-live history, let us remember the lessons from the past. I found this blog post titled ‘Another Prick; Is the Bubble Over?‘ that does a good job of reminding us – read and learn or re-live and suffer!!!

Here is the full reference to the post I mentioned: http://blog.openviewpartners.com/another-prick-is-the-bubble-over/?referrer=exacttarget

—Kent

Tags: , , ,
Posted in Advice, Financing | No Comments »

Financial Statements – Where Is The Value?

May 27, 2011

Are you tired of financial statements with little to no value?

As I meet with one business owner after another, I am astonished with what they have to work with to run their businesses. The ones that are doing well have a simple balance sheet and income statement printed from their accounting system for a single month. Many business owners aren’t even fortunate enough to have that!

So what is wrong with a balance sheet and income statement for a single month? The answer is lack of perspective. How do you know if the numbers you are viewing are good, bad or somewhere in between? Without perspective, you really have no idea!

Gilbert Keith Chesterton said: “It isn’t that they can’t see the solution. It is that they can’t see the problem.”

How does this relate to financial statements?

When reviewing financial statements you should be able to answer certain questions, such as: How did the company perform compared to the last few months? How did the company perform compared to last year, for the month and year-to-date? How did the company perform compared to its strategy, as outlined in the annual budget or to years past?

A company may have a loss for the period and be doing very well when compared to budget and compared to years past. Additionally, the company may be profitable for the period and be doing poorly when you consider where it could or should be.

If you don’t have financial information that properly identifies the problems within the company, how can you possibly be in a position to identify or offer a solution? If your company’s financial statements aren’t providing you with the financial information you need to effectively run your business, consider contacting Advanced CFO Solutions for accounting and financial solutions with perspective and value.

Jerry Vance, Partner
Advanced CFO Solutions

Tags: , ,
Posted in Advice | No Comments »

Want Respect? Add Value and Produce Results!

April 13, 2011

In a recent article from cfo.com the author discusses the proper role of the finance / accounting team – an issue that is finally getting the attention that it deserves. The author tells of a personal experience that is far too common:

“I once joined a company where the finance department was viewed with some disdain. Rather than being seen as helpful, it was regarded more as an obstruction because, many felt, it didn’t understand the business. Finance was seen as a necessary evil that was all about historical reporting, playing the role of corporate cops focused on policy and procedure, and stressing form over substance.”

This lack of respect was symptomatic of the fact that the finance staff was trying to control the business rather than serve it. By putting disproportionate emphasis on accounting issues, they were limiting the organization’s business potential and putting its very existence at risk. I was certain we could properly account for all the business activities, right down to shutting off the last light. But we needed to focus more on future market potential while still meeting all fiduciary responsibilities.”

Unfortunately we see this same situation over and over again but it can be changed and with the right leadership, the team can catch the vision, produce results and gain respect by delivering its highest and best value to the business. Finance is responsible for timely, accurate and actionable information and analysis to help everyone in the company make better decisions – this is much than mere financial statements at the end of the month. Team members must learn how to serve the organization by integrating themselves into and becoming strategic partners with operating units while maintaining their important fiduciary/oversight role.

Respect is earned, over time, by delivering consistent, valuable results. Finance is in a position to know more about a business than almost any other department and can create essential value if the team members understand the vision, assume their proper roles and use their knowledge to serve the operating units and guide their company to success.

If your finance staff does not see this vision or is not delivering this kind of value, let’s talk about how to make that happen!

Tags: ,
Posted in Advice | 1 Comment »

Can the CFO Really Make a Competitive Difference in a Company?

May 12, 2010

Recently I read a blog posting from Cynthia Mignogna at Openview Venture Partners. It is a good summary of the role that the Chief Financial Officer can and should play in an organization. In all of my speaking engagements, I emphasize that the CFO must think strategically and be able to deliver timely and accurate information that clearly indicates whether or not the business is progressing towards it strategic plan and goals (i.e., is it winning or losing?).

I recently taught a session on Advanced CFO and Controller skills to a group of 23 CFO’s and Controllers. At the beginning of the class I asked how many could give me a concise summary of their company’s strategy – only three raised their hands. Apparently this is not unusual. In a recent study, Right Management Consultants found that less than one-third of employees are fully engaged in and know their employer’s missions. My greatest concern is that if the CFO or Controller does not know the Company’s strategy, what does that say about their ability to provide valuable data to employees and management?

A good CFO must be able to align the internal reporting systems with the Company’s strategy and translate it into key performance indicators (measures of important activities that are quantifiable, measurable and meaningful) that the other managers and employees help to identify and take responsibility for. These metrics must be reported frequently and used to evaluate the employee, team or company’s progress towards achieving the stated goals.

Every CEO needs and deserves to have a strategic financial partner on her or his team to provide valuable and actionable information in order to have confidence in the decisions he or she makes every day. If you do not have or have not experienced this in your business, please call us, we can help – and the good news is that when we act as your outsourced, strategic CFO, the cost is a fraction of what you would have to pay for a full-time CFO!

Tags: , , ,
Posted in Advice | No Comments »

Is Your Business Ready For Healthcare Reform?

March 24, 2010

You might wonder why I would write about healthcare reform in a blog for a CFO Outsource and Accounting Services website.

Well the answer is not a political one – it is because medical insurance and healthcare costs are a significant cost to businesses, especially small businesses, and since at least part of the reform legislation has become law, entrepreneurs, executives and owners need to understand how this new law is likely to impact their business.

I received an e-newsletter from the law firm of Dorsey & Whitney LLP that contains a truly non-partisan, unemotional summary of the new law and analyses of its potential impact on everything from insurance premiums to tax credits and new programs to payroll tax rates. I suggest that you take a few minutes to read this summary and that you start thinking about how this may affect your business and what changes, if any, may be strategically important to plan for in the future.

Since many changes that will impact business don’t take effect until 2011 and beyond, management and owners should have time to properly plan for and minimize the negative impacts, if any are to occur. I recommend a thoughtful review now, not later, however because it is entirely possible, and quite likely in my opinion, that insurance companies who are impacted almost immediately, will start to make changes in policies, coverage, terms and premiums and business owners need to be well educated in order to  navigate successfully through this changing environment.

Here is a link to Dorsey’s article titled ‘Health Care Reform Is Here’ – please contact me or your CFO Solutions’ consultant if you would like help modeling how this landmark legislation, and potential strategies to deal with it, may impact your business.

—Kent Thomas

Tags: , , ,
Posted in Advice | No Comments »