The Client
The client is a technology company that provides a streaming SQL database for real-time applications, live dashboards and streaming data pipelines. With a global presence and growing operations, the client faced various accounting challenges that required professional expertise to address.
The Challenge
The client faced several accounting challenges that needed to be addressed to ensure their financial records were accurate and compliant. Some of the challenges included fixing equity history, managing unvested shares and liabilities related to early employee exercises, accounting for monthly vesting, managing stock repurchases and incorporating a new foreign subsidiary and producing a consolidation. As the company grew, its in-house accounting team encountered increasingly complex tasks that required specialized expertise and resources. The team recognized the need for external support and a more streamlined solution to avoid potential audit issues and ensure financial accuracy.
The Approach and Solution
The client decided to outsource their accounting needs to Withum, known for its expertise in addressing financial challenges across many industries, including tech. Withum’s experienced team collaborated closely with the client to understand their unique needs and develop customized solutions for their accounting processes.
- Equity history and consolidation processes: Withum created a detailed statement of accounts to manage complex equity histories accurately. They also developed a consolidation process to appropriately convert foreign currency to USD and account for intercompany activities and eliminations.
- Cash flow reporting: The client requested a detailed statement of cash flows, including consolidated reports for their U.S. and foreign entities. While the company’s US parent accounting system, QuickBooks Online, does run a simplified cash flow report, it is not 100% accurate because it does not properly account for non-cash income items such as stock-based compensation, depreciation and amortization, and unrealized investment activity.Withum designed an Excel model to capture and report cash flows properly, ensuring accurate handling of non-cash income items such as stock-based compensation, depreciation and amortization, and unrealized investment activity.
- Revenue recognition guidance: Withum guided the client on how revenue should be recognized under their new usage-based billing model, ensuring compliance with generally accepted accounting principles (GAAP). The team developed customized schedules to track and recognize revenue accurately for both upfront annual contracts and pay-as-you-go arrangements.
- Departmental expense tracking: To improve expense tracking at the department level, Withum utilized QuickBooks Online Classes. All payrolls are allocated to the appropriate class as are all other expenses – both transactions and monthly accruals. This has helped the client internally to analyze results at their desired department level.
The Results, ROI
The collaboration with Withum delivered measurable benefits, addressing the client’s immediate accounting challenges and positioning the client for future growth while providing a strong foundation for their upcoming first-year audit. The results of the engagement included:
- Improved accuracy and compliance, reducing the risk of potential audit issues.
- Streamlined accounting processes, resulting in more efficient and effective financial operations.
- A visible and tight close schedule that ensures monthly numbers, including consolidation, are finalized by the 15th of each month, enabling the client to make informed business decisions ahead of their recurring board meetings.
Withum’s expertise and tailored solutions not only provided the client with a solid foundation for their financial operations, enabling them to focus on their core business objectives with confidence but also established Withum as their trusted advisor for future business needs.
Contact Us
For more information, please contact a member of our team.
