Revenue heads in the Chart of Accounts (COA)

Find out interesting insights with Dave Sackett, Finance Persimmon Technologies

Moderated by Jane, a financial technology consultant at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Jane: Hello, everyone! This is Jane, a financial technology consultant here at Hyperbots, and today we are joined by Dave Sackett, who is the VP of Persimmon Technologies. Welcome, Dave. Thank you for joining in.

Dave Sackett: Yeah, thanks, Jane.

Jane: Let’s dive straight into it. The topic we’ll be discussing today is revenue heads in the chart of accounts. This topic is critical for effective financial management and strategic decision-making in any organization. To start, can you please tell us why structuring revenue heads properly in the chart of accounts is so important for organizations, especially across different industries?

Dave Sackett: Yeah. So what you have are compliance issues, and different stakeholders need to know revenue accounts to manage the business properly. Depending on the industry you’re in, it can vary significantly. If you’re a SaaS company, you’re looking at usage, internet clicks, etc. If you’re a manufacturing company, you have product revenue. In a service company, the revenue structure differs again. So, regardless of the industry, you may have vastly different ways to look at revenue.

Jane: Understood. What are some common mistakes or errors accountants make when creating revenue heads in the chart of accounts?

Dave Sackett: People who like data often want everything at their fingertips. They might create a revenue structure with very tight granularity, capturing every detail. But in reality, it works better to have a simplified chart of accounts and use other reports for additional details. This helps focus the audience on the right revenue and keeps everyone on target. When you have new business lines or revenue streams, that’s the right time to expand how you look at revenue.

Jane: Got it. Can you share some best practices for structuring revenue heads to avoid these common mistakes?

Dave Sackett: Yep. You want to meet with your stakeholders and figure out what your end product and reports will look like, and who needs the data. It may be for regulatory compliance or reporting to a parent company that consolidates results. Revenue tracking can be critical, especially for accounting eliminations. It’s important that everyone is on the same page when it comes to revenue, and you want to avoid overcomplicating it.

Jane: Understood. How can AI help improve the management and structuring of revenue heads in the chart of accounts?

Dave Sackett: Luckily, we’re in the age of AI, where advancements are happening quickly. AI can support you not only in creating revenue accounts but also in analyzing revenue changes, performing flux analysis, and digging into variances. So, AI has become almost a partner in accounting and finance. Focus on the problem first, then see how AI can support it. As technology progresses, AI’s ability to help will only increase.

Jane: Understood. Can you provide an example of how a specific industry, such as retail or manufacturing, benefits from an AI-validated chart of account structure for revenue heads?

Dave Sackett: Yes. I work in a manufacturing company where we make robots. AI helps us by analyzing variances and providing guidance on whether transactions are going to the correct accounts, or if revenue should be structured differently. AI can alert you if you have transactions that look incorrect based on descriptions, helping guide you in setting up revenue accounts and suggesting whether to add or consolidate accounts. It’s like having another set of eyes to assist in your accounting work.

Jane: Got it. How often should organizations review and update their revenue heads in the chart of accounts, and what factors should trigger these reviews?

Dave Sackett: Right now, I’m transitioning to a new ERP system, which is a great time to revisit revenue categorization. My goal is to keep things simple and basic, and as the business grows and new revenue streams come in, we’ll add accounts but starting with a strong foundation and adding as necessary is key. I wouldn’t recommend changing revenue categorizations frequently, but major milestones like a new compliance report or a new product or service might trigger a review. If no major events occur, an annual review, perhaps during budget planning, is a good rule of thumb.

Jane: Understood. Finally, what advice would you give to CFOs or financial managers looking to optimize their revenue structures in the chart of accounts?

Dave Sackett: Look to the future. Consider tools available today that weren’t available two or five years ago and see how they can help you. AI is very powerful now, especially with advancements in large language models. These AI systems can now really understand your business, and you can train them to support your efforts in tracking revenue.

Jane: Understood. That’s it. Thank you, Dave, for sharing your valuable insights on managing revenue heads in the chart of accounts. Your guidance will surely help many organizations optimize their financial structures and enhance their decision-making processes.

Dave Sackett: Great, thanks, Jane.

Jane: Thank you.

ROI on AI-led Automation Initiatives in Finance

Find out interesting insights with Bimal Shah, CFO Corium & Strategic Advisor

Moderated by Emily, Digital Transformation Consultant at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Emily: Welcome to the latest installment of our interview series, where we delve into the intersection of finance and technology. Today, we are privileged to host Bimal Shah, an esteemed finance professional with extensive experience in the pharmaceutical industry, including serving as a CFO. Our focus for this session is on understanding the return on investment (ROI) of AI-led automation initiatives in finance. Let’s dive in!

Emily: Hello everyone, and welcome! I’m Emily, a digital transformation consultant at Hyperbots, and I’m thrilled to have Bimal joining us today. Bimal, before we jump into the details, could you please share a bit about your background?

Bimal Shah: Certainly, Emily. Thank you for having me. I’ve spent over a decade in senior financial roles within the life sciences industry, ranging from privately held firms to publicly traded companies. My expertise lies in navigating the complexities of finance in the pharmaceutical sector.

Emily: Thank you, Bimal, for that introduction. Let’s structure our discussion today into three key areas: understanding ROI methods, AI adoption in finance, and challenges and recommendations. Starting with ROI methods, Bimal, as a seasoned CFO, what frameworks have you employed to evaluate ROI?

Bimal: ROI, or return on investment, is paramount in financial decision-making. It can be measured through metrics such as internal rate of return, payback period, or simply as a ratio of investment returns. Assessing ROI involves considering factors like technology costs, implementation expenses, and potential cost savings or efficiency gains.

Emily: Fascinating insights, Bimal. Moving on to AI adoption in finance, which processes do you see as ripe for AI integration?

Bimal: Invoice processing, accounts payable, and accounts receivable management are prime candidates for AI adoption. These areas involve repetitive tasks that can benefit from automation, leading to cost savings and improved accuracy.

Emily: That’s insightful. And how would you prioritize AI adoption within the finance function?

Bimal: I would start with areas like accounts payable and receivable, where the tasks are relatively straightforward but labor-intensive. Demonstrating the benefits of AI in these areas can pave the way for adoption in more complex functions like financial planning and analysis.

Emily: Excellent advice, Bimal. Now, let’s delve into the nitty-gritty of calculating ROI. Could you elaborate on the quantitative and qualitative gains of AI-led automation?

Bimal: Quantitative gains include cost savings from reduced headcount and improved payment processing efficiency. On the qualitative side, benefits such as enhanced decision-making and employee satisfaction are harder to measure but equally valuable.

Emily: That’s a comprehensive overview. Bimal, how would you recommend measuring ROI for automation initiatives, considering both direct and indirect costs?

Bimal: Direct costs, such as technology investments and labor expenses, are relatively straightforward to quantify. However, capturing indirect costs and intangible benefits requires a more holistic approach. It’s essential to focus on measurable metrics while acknowledging qualitative gains.

Emily: Thank you for clarifying that, Bimal. As we near the end of our discussion, how would you suggest CFOs and controllers approach ROI measurement and publication for automation initiatives?

Bimal: I advocate for a balanced approach, emphasizing quantifiable benefits while acknowledging qualitative gains. Attempting to overly quantify intangible benefits may dilute the credibility of ROI calculations. Transparency and clarity are key when communicating the value of automation initiatives.

Emily: Wise counsel, Bimal. Finally, in terms of risk assessment, how do you recommend quantifying potential risks associated with AI implementation?

Bimal: While risks such as damaged relationships or employee concerns are challenging to quantify, they must be acknowledged and managed. Mitigating risks requires proactive communication, stakeholder engagement, and a focus on seamless implementation.

Emily: Thank you, Bimal, for your invaluable insights into maximizing ROI on AI-led automation initiatives in finance. It’s been a pleasure discussing these critical topics with you.

Bimal: Likewise, Emily. Thank you for hosting me, and I look forward to future conversations on the evolving landscape of finance and technology and there you have it, folks! A deep dive into the ROI of AI-led automation initiatives in finance, featuring insights from Bimal Shah, a seasoned CFO. Stay tuned for more enriching discussions on the intersection of finance and technology.