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Finance and Accounting Support in Franchise Systems

Finance and Accounting Support in Franchise Systems

There has always been somewhat of a love/hate relationship between franchise operators and their franchisees. While many entrepreneurs elect to leverage a known brand, documented operating procedures, and combined purchasing power that is often a benefit of a franchise operation, the reluctance to open the books to the franchisor is sometimes based upon a fear that “big brother” will use the information to take advantage of the business owner. The two sides of the business model aren’t always operating in sync, even though a deeper level of finance and accounting process support might benefit both greatly.

Logic would suggest that both the franchisee and the franchisor would recognize the validity of sharing financial and business performance data for the benefit of the entire system, where benchmark data and performance comparisons can become the basis of tremendous business intelligence. But some franchisors, as their networks expand in size, find that their success in selling units begins to outweigh their concern for individual unit performance, and the brand value creates sufficient momentum to overcome a few bad business experiences. Especially in larger systems, the franchisors don’t often consider the benefits of providing back-office and accounting support for their franchisees, because they simply don’t feel they have to. That is changing to a degree, and reliance on quality accounting and financial data takes on entirely new meanings in an environment where franchising is increasingly more complicated and competitive.

High unemployment and low consumer confidence cause spending decreases which impact even the strongest of established businesses. With credit markets being as tight as they are and without qualify financial information to support the request, business owners are often unable to obtain the financing required to expand their businesses when required, to new locations or with additional personnel. The 2010 Franchise Business Outlook[1] suggested that, even as the economy starts to recover, franchised small businesses will continue to face these financing struggles. The forecast is for “a slow recovery with marginal increases in the number of establishments, jobs and output.”

Looking to Washington for help, a number of small business organizations, along with The International Franchise Association, are “calling upon Senators to include more provisions in new job creation legislation to help small businesses access credit.” [2] The fear is that if credit access for small business isn’t made available now, the best opportunity to create sustainable business and subsequent job growth will be lost. Reliance by small businesses upon credit is unquestionable.

According to the IFA, “the depletion of [SBA loan] funds last fall is proof that the SBA programs were, and continue to be, critically important for our nation’s creditworthy entrepreneurs”. However, without sound business accounting and provable data, even the most business savvy entrepreneur may find their business “unbankable” and must therefore rely upon personal credit guarantees to support business growth.

Possibly the strongest point in the argument for franchisors facilitating accounting and financial management assistance to the franchisee centers on Item 19 of the FTC and state Franchise Disclosure Documents (FDD)/Uniform Franchise Offering Circular (UFOC). Item 19 is the Earnings Claim, which are estimates or historical figures detailing sales, expenses, and income a prospective franchisee might realize as the owner of a particular franchise.

The Earnings Claim is often considered to be the single most important factor in buying a franchise. As with purchasing any business, it is critical to have a realistic and supportable projection of sales, expenses, and profits earned. Particularly in a case where a potential new franchisee has no experience running a business, or no applied experience in that particular type of business, the earnings claim becomes the only guidance available. Unfortunately, the only source for this information is the franchisor itself, which often introduces doubt as to the veracity of the data. It is difficult to determine which could raise more doubt about the sincerity of the franchisor: using unverifiable data, or not providing an earnings claim at all.

When a franchisor elects to provide services to their franchisees, such as back-office accounting support or financial management oversight, then the opportunity to obtain data for the earnings claim, performance benchmarking, and royalties verification become realistic goals. Further, the ability to verify and substantiate the data can prove invaluable in a tough franchise market where buyers want good, verifiable information, and Item 19 helps sell units.

Offering accounting support to small business owners isn’t a new concept, but the technology to facilitate a truly seamless relationship has only become available in recent years. As Internet and Web-based application services emerged on the market, businesses flocked to them in order to gain the benefits of anytime, anywhere access to applications and data. However, the poor performance and lack of features left some business users without the tools they needed to handle all their requirements efficiently, so many returned to manual or local PC-based systems.

Secure remote access and application hosting services are a technology approach which adapts trusted and proven software and systems to a cloud-based, collaborative online working model. The server-based application model, which is essentially a hosting approach delivered from on-premises computers or offsite hosting infrastructure) allows the businesses to continue use of applications with the functionality required to support the business, but improves the IT environment by managing and securing the applications and data within the confines of the host. This eliminates the need to install or maintain applications on different computers and eliminates the need to have data copied or sync’d to different computers and devices.

A valuable aspect of providing secure remote access and centralized access to applications and data is the ability to then integrate with reporting systems designed to assist in the translation, analysis, and comparison of data from a single business to an entire franchise system.

Deploying server-based (hosted) computing models with remote and mobile capability means owners are able to retain their investments in software applications and processes while introducing new efficiencies and flexibility in their working models. The evident benefits are the ability to access information from any location, to have multiple locations work seamlessly together, and to allow outside accountants or other service providers to work seamlessly in the organization. Adding commercial hosting of the server expands on centralized management and administration with professionally-secured systems, greater predictability in ongoing IT costs and an improved ability for the business owner to focus on the business.

In summary, the franchisor market must look more closely at the fiscal management and reporting systems of their franchisees, and provide avenues to better-address access and support for accounting and bookkeeping responsibilities in order to gain credible performance data and useful benchmark metrics. Only through the ongoing participation of accredited accounting and financial personnel can the business financial data provide the information – and the insight – required to support aggressive business growth in this difficult economy.

The key is seamless integration, and the technology solution is the cloud-enabled model.

Make Sense?

J

[1] Report that measures the economic impact of franchising in the United States, prepared by PricewaterhouseCoopers (PwC), and commissioned by the International Franchise Association Educational Foundation. http://franchise.org/uploadedFiles/Franchise_Industry/Resources/Education_Foundation/2010%20Franchise%20Business%20Outlook%20Report_Final%202009.12.21.pdf

[2] Franchise.org Press Release http://www.franchise.org/Franchise-News-Detail.aspx?id=49246

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Accountants and Bookkeepers Working With QuickBooks Clients: App Hosting Approaches That Work

Accountants and Bookkeepers Working With QuickBooks Clients: App Hosting Approaches That Work

Ever since the first application service providers began offering hosting services for Intuit QuickBooks desktop products, the idea of running desktop editions of QuickBooks in the cloud has created both intrigue and confusion among accounting professionals and their clients alike.  Part of the problem is the term “cloud”, which seems to equate the hosted QuickBooks desktop editions with the true cloud app QuickBooks Online Edition.  But hosted QuickBooks isn’t QBOE, it’s a service model developed around the actual desktop versions of QuickBooks: Pro, Premier and Enterprise.

While it is true that both solutions – hosted QuickBooks and QuickBooks Online Edition – offer centrally managed and accessible online accounting functionality, the underlying services are very different and operate under completely different “rules”.  One of the rules, or conditions, which differs between the two solutions is that with hosted QuickBooks service, you may also be able to run other business applications and manage other business data, not just QB apps and data.  This is an essential capability when you consider that QuickBooks desktop software integrates with and takes advantage of functionality found in other popular business solutions, such as Microsoft Office.

In many QuickBooks hosting services, the inclusion of Office app hosting is typical due to the reliance upon functionality in those solutions (Excel reporting, Word letter-writing, and Outlook emailing).  When it comes to other tools or application integrations, however, customized hosting service becomes necessary.   When the need for additional applications or integrations arises, consideration should be given to the best way to orient and implement those add-ons.

For example, if a client business has a heavy reliance upon a solution which integrates with QuickBooks, and uses the solution to handle daily tasks in the business, then it makes a lot of sense to create a hosting environment specifically for that client.  The client would be able to access their unique set of solutions, and the accounting/bookkeeping professionals can be invited to participate in that system.  This keeps the data in one place, managed and controlled, yet allows all parties who need access to get access.

In other situations, there may be a tool or utility necessary to help get data from one place to another, and this tool or utility is not something the client uses in their daily work.  In this type of scenario, it may make sense for the accountant/bookkeeper to have a customized environment which allows them to use the tools and solutions which assist in data integration, organization, validation or review.  In many cases, the accountant or bookkeeper may perform these data integrations or sync operations directly in the client data file, so that the client (using “generic” service with just QuickBooks hosted) is able to then access and view the integrated data.  In this scenario, only the accounting professional has the additional tools necessary, allowing the cost of hosting for the client to remain lower.  Approaching a hosting environment in this manner might allow the accounting professional to develop a niche or customized approach to serving a specific type of client, incorporating behind-the-scenes data aggregation or integration and other types of process support as part of the overall service delivered.

The key to developing the right application hosting and outsourced accounting service model is to focus on how the practice will use the hosting solutions to improve service and process efficiency, serve client needs better and more fully, and differentiate themselves from their competitors in the market.  By applying the hosting service and online solution properly, business clients and the accounting professionals who support them will both benefit by getting the information and the application functionality they need, when they need it.

Make sense?

J

read more about the confusion over hosted licensing on The Progressive Accountant http://www.theprogressiveaccountant.com/tech-tips/confusion-over-hosted-licensing.html

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Reinventing your Business – What Happens When Systems Fail?

Reinventing your Business – What Happens When Systems Fail?

There is a lot of discussion today about how our children are growing up in a world where high technology is simply part of life and lifestyle.  I even read an article about how people are evolving because of the availability of information; evolving to the point where we no longer store and retrieve information, but store information on how to get information.  The article cited an example of someone who couldn’t recall the name of an actress in a movie they had seen, so the immediate response was to search for the answer on Google.  In the past, people relied upon memory, and found various ways to mentally associate and store information so it was able to be recalled.  Now, there’s an app for that.

Are we losing our ability to effectively store and recall information?  Are we forgetting how to do things before we had all this technology to help us?  It makes you wonder sometimes, how technology-dependent we are. We look at the ruins of past civilizations and view seemingly impossible structures, (impossible given what we know about the technology available at the time) and wonder how they came to be.  The knowledge was there at some point, but is now lost.

Is your business at risk from a similar fate?  Maybe it sounds silly, but it makes sense to at least think about it, because there are a lot of companies out there today that are not paying attention to critical issues such as knowledge management and sustainability.  Finding ways to capture business knowledge and protect it is essential in every organization, whether small business or large enterprise.

Small businesses are often centered on an owner who started the operation, and who just knows how things are done.  The primary goal in this situation is to capture that knowledge and turn it into process.   Only through this approach may a business begin to reduce its reliance upon a single individual, and this is a critical step in creating both sustainability and continuity in the business. In larger enterprises, process and structure are essential to keep the various parts and participants moving in the same general direction.

Once those processes are established, generally using technology to support or facilitate them, is that the end of the task?  Many businesses seem to believe so, and move along with the impression that they have things well in hand.  And then a major system or technology failure occurs, and folks are left standing around, unable to get their jobs done.  In the worst cases, there isn’t anyone in the business who really understands how to pull things back together or there is no longer access to electronically stored information necessary to continue operations.  How would you handle things if your systems – your computers and software and systems – were no longer available to you?

While GPS and high-tech auto-pilot systems can bring tremendous efficiencies to the process of flying, they also can give a false sense of security that encourages complacency. If something goes wrong, the auto-pilot will adjust and the computer will tell you where to go, won’t it?

Here is where technology has the ability to distract pilots–and entrepreneurs–from asking themselves if they’re both focused on and capable of solving the right problems.

http://www.inc.com/chris-mittelstaedt/business-lessons-from-air-france-447-crash.html

Each and every business must consider how they would address a severe information technology outage, and should take steps to protect and preserve business knowledge so that there is some hope of recovery from such an event.  In an article on Inc.com (Survival Skills Every Entrepreneur Needs), writer Chris Mittelstaedt makes this observation, and suggests that business owners address how they might get things done “old school”, just in case all this nifty technology fails us unexpectedly.

Make sense?

J

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Accountants and Small Manufacturers

rollingballGetting in Front of the Ball

There’s a lot more to accountability in a manufacturing or inventory-based business than simply keeping track of money in and money out.  Particularly in an economy when nobody can afford to build or stock products too far ahead of demand, it is essential that these businesses have a means to not only track and manage purchasing, manufacturing, distribution and stocking activities, but to understand conditions or trends which impact the flow of materials and cash through the business.  Further, this understanding must come in a timely manner in order for the business owner to make decisions and take action when it matters most.  Unfortunately, many business owners find themselves “behind the ball”, constantly pushing to make forward strides, and often due to not having the information they need to make business decisions that matter now, today.

Why is it so critical for these businesses to have more and better information to help them make strategic decisions and answer daily operational questions?  In a word: connectedness.  The Internet has truly made the world smaller when it comes to participation with even the smallest of local businesses.  Globalization of markets has impacted manufacturers in significant ways, and these businesses (like so many others) must now be prepared to address the realities of global supply chains, outsourcing, and a remote or mobile workforce and market.  While many of the software solutions addressing the functional business requirements of manufacturing and inventory or warehouse management are “locally implemented” solutions, extending and integrating these solutions to address the new global and mobile paradigm may represent a significant expenditure in time and resources for the small enterprise.

Application hosting and web-based solutions have emerged to help businesses address the need to “modernize” legacy applications and enable greater levels of system management and access.  Introducing the applications into a centralized and remotely accessible environment allows the business to immediately deliver the necessary support for remote work and mobile access, and positions the system to facilitate collaboration within the business and with outside participants, such as outsourced bookkeepers, accounting and finance professionals.

These professionals can be instrumental in assisting their clients manage the change to new collaborative computing paradigms.  Where accounting was previously viewed as an after-the-fact process, accountability through detailed activity tracking and reporting is now a focus which begins at the front end of the business, and accounting professionals are finding far greater value in helping structure and manage this daily activity in order to deliver greater operational information and insight.  Rather than being the last people to know what is happening in the business, accounting professionals are recognizing that their ability to positively impact business performance requires getting “in front of the ball”, initiating process structure, data control and collection which ultimately results in better and more informed decision-making through better and more timely access to more meaningful information.

Businesses at all levels are realizing that new computing paradigms can ease the burdens of collecting and sharing information, yet most small companies need help in determining exactly how to approach this “enabling” of the business and systems.  While accountants are also experiencing dramatic change in how they do business, it makes sense for them to embrace the opportunity and recognize that enabling client systems will ultimately allow the accounting professional to work more closely and to deliver more tangible value to their client on an ongoing basis.  Online accounting approaches are no longer a fad but are the new reality supporting how many bookkeepers and accountants work with their business clients.  Extending access beyond accounting and bookkeeping systems, and incorporating support for operational and line-of-business solutions, is the next step which will bring the accountant closer to the client business, and position both to benefit from deeper collaboration and useful insight.

Make Sense?

J

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Working Online With Clients: How to leverage the internet and cloud computing to work closer with your clients

Working Online With Clients: How to leverage the internet and cloud computing to work closer with your clients

When it comes to using technology and the Internet to work closer with bookkeeping and consulting clients, it is important to recognize that there is never only one way to accomplish something, and different clients will have equally different ideas on and tolerances for how you work with them.  In order to serve each and every client to the best of your ability, you have to carry around a “toolbox” of solutions and services which will assist you in delivering the most effective and efficient service in each situation and under each set of conditions.  While you must do what you can to streamline and standardize your processes to be as efficient as possible while delivering a high level of service, but you can only work within the parameters allowed by each client and circumstance.

Paperless_468x80

I think we can all agree that, whenever possible, it is wise to avoid situations where you have to get in the car and drive somewhere just to pick up information or paperwork.  These are the activities which are most costly in terms of time and resources.  Using file sharing solutions, such as DropBox or ShareFile, is a great way to get documents from clients.  That is, if the documents are in electronic form already.  If not, then either scanning the files and saving to the Dropbox or web folder, or faxing them to a service such as eFax, is the process.

Sometimes Internet connectivity is the issue.  Using a fax-to-email solution like eFax takes that out of the picture, in terms of getting documents and other paperwork from the client.  But let’s face it… there is no good way to electronically exchange or share QuickBooks or other computer data files safely and quickly unless the client has broadband Internet access.  You can always go back to dialup modems and connect using the old version of PCAnywhere, the way we did it years back, or you can recognize that sometimes you just have to get in the car and bring a USB drive with you.

Internet-based remote control solutions, such as LogMeIn, provide you with the ability to connect your computer directly to the client computer in order to perform tasks on their system and with their data.  This is a better approach than going to the client office and doing the work there, but it doesn’t address a situation where both you and the client need to be working at the same time.  If you are controlling their computer, you take over the workstation while you are connected, which prevents the client from doing independent work while you are doing your job. The better option is to use a solution that allows you to both work at the same time, even when connecting to the same computer.  MyQuickCloud does this. MyQuickCloud is a remote access solution that can be applied as both a remote access and remote working solution. It is better than remote control because it can allow many users at the same time to connect to the computer and run applications.

In some cases, working online with the client may mean working in the same applications and data files by accessing a centralized online solution, such as QuickBooks Online Edition or hosted QuickBooks (QB Online and hosted QuickBooks are not the same thing).  When both people (the client and the accountant/bookkeeper) have access to the same programs and data files in real-time, it allows them to work together more closely yet at times and from locations which work for the individuals.  This arrangement works quite well when the accounting professional and the client can both serve their requirements with the same software solution.  If the client uses QuickBooks to perform their daily tasks, the bookkeeper and accountant are able to simply log in and use the same solution to perform their work.

A model which more people are beginning to recognize as valuable is the model where each user or functional area in the business has the solution which works best for them, and the various solutions in the business each integrate and share data as necessary.  For an accountant or bookkeeper working with a small business, this may mean that the software or solution used by the client to handle their daily tasks is different from the solution used by the accounting professional to do their job.  Just as a tax preparer will use accounting data to prepare a tax return using a tax preparation solution, accountants may use transactional or financial data from other systems to perform accounting functions in an accounting software solution.  As long as the data is easily accessed, via built-in integration or sync tools, it makes a lot of sense to give each user a solution designed to meet their process needs because they will use the solution more effectively.  Giving a user way too much functionality can be confusing, and expose them to areas of business activity or information they should not have access to (or which is meaningless to their job) can waste time and introduce risk.

Examples of this approach might be where a small business owner uses FreshBooks accounting to manage their daily invoicing, but the information is then exported to and integrated into QuickBooks financial software, where the accountant or bookkeeper handles the rest of the business accounting functions. Another example may be when services such as Bill.com, TSheets, Expensify, Concur, and other “point” solutions are in use. These web-based solutions provide specific functionality, such as bill payments and approvals, employee timesheet management and reporting, expense management, and more.   They make it easier for the client to handle certain functions and address related information management and reporting needs, and facilitate the data integration with core accounting and finance.  In many cases, this approach delivers not only more relevant functionality and process support for the business users, and still allows the accounting professional to do their work with the tools which work for them.

Providing a high level of service to your client while embedding as much efficiency in your processes as possible can be a challenge for any outsourced accounting or bookkeeping professional.  Your profitability and the goodwill you develop with your client depend on finding the best way to engage and deliver on the promise of great service.   Your toolkit  – the connected services and solutions you leverage to this task – can positively impact the “degree of success” you experience with each client or project.

Make Sense?

J

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Knowing Your Options: Hosting QuickBooks for Shared and Remote Access

Intuit’s QuickBooks financial applications, the desktop editions in particular, are the most popular small business accounting solutions on the market.  The QuickBooks Online Edition, Intuit’s cloud-based contender, is not quite as accepted among accountants and advisors for a variety of reasons.  Being in the cloud isn’t necessarily one of those reasons, if you consider the growing demand for access to multi-user cloud-hosted QuickBooks desktop editions.  Mostly it comes down to functionality and how the application operates.  QBO just isn’t like good old desktop QuickBooks and isn’t the preferred solution for many financial professionals or their clients.  Yet these users still want and need remote access and mobility.  This is where hosting comes in.

QuickBooks hosting and creating the ability to access QuickBooks applications and data remotely is something that a lot of businesses can benefit from.  Whether it’s to outsource the management and maintenance of servers and systems to a 3rd party, or to create the ability for remote workers or contractors to collaborate with real-time applications and data, there may be a need for a hosted application approach.  Business owners and IT managers need to give consideration to the level of service and support they and their users will need before selecting their provider.  Knowing what the provider will handle and what the subscribers are responsible for might make all the difference in determining the right approach.

In-House DIY Hosting

Local networks and PCs allow users in the same location to share resources, like printers and data storage locations.  Typically, desktop computers have application software installed on them, and use the network to access shared data.  When users work outside of the network, getting access to applications and data might not be so easy.  Even extending the network via VPN access doesn’t solve the problem when the desktop applications are not designed to access data over remote connections (desktop applications like QuickBooks).  It used to be that the only reasonable way to allow remote users to access and run QuickBooks as if they were inside the LAN was to set up remote desktop or application servers (terminal servers).  MyQuickCloud is a product that addresses this need very gracefully, providing in-house personnel with the tools necessary to establish a secure cloud for QuickBooks access directly from existing on-premises systems.

Co-location and Outsourced Infrastructure (IaaS)

Instead of setting up remote access solutions in the office, many IT departments find that co-location with a 3rd party addresses a number of issues.  Leasing equipment, operating system and virtualization tools may be more cost-efficient than purchasing them directly, and the security and redundancy in most hosting facilities far exceeds what most businesses are able to afford to implement by themselves.  Co-location provides managed service for infrastructure elements, but doesn’t necessarily address business needs in terms of user security or application and data management.  These elements are traditionally left up to the subscriber; installing and configuring software applications, establishing user and application permissions, and managing updates and software upgrades.  For this reason, co-location may be a good option for a business with internal IT staff, but not necessarily for businesses seeking “full service” application hosting.

Application Service Providers (ASP) and Managed Application Hosting

Application hosting service providers handle software installation and management, user and security administration, and ongoing technical support as part of the subscription service.  Customers need only to provide their software licenses, name users and upload data in order to use the service.  The service provider does the software installation and configuration, sets up the users and establishes permissions, and connects users and applications to managed data storage.  This model allows businesses to enjoy many of the benefits of a cloud-based or SaaS solution model while also allowing them to continue to use software solutions they are already invested in, in terms of both software licensing and process development.  On the other hand, these models can be extremely restrictive in terms of the applications or integrations they will support, and can be quite costly as the number of users or applications hosted increase.

Whether you roll your own (DIY hosting) or work with a full service QuickBooks host, accessing business applications and data from anywhere is an option every business can take advantage of.

Make sense?

J

Read about the race to find the secret sauce of hosted application services for small businesses