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Franchise Accounting Pain Solved

Franchising World / February 2022

During times of economic challenges, franchising systems tend to remain strong.

 

COVID-19 represented an opportunity in the franchising world, as people were laid off and furloughed due to an unprecedented pandemic. Many took the opportunity to bet on themselves and took the entrepreneurial path to business ownership through owning a franchise. People invest in a franchise because they have a community of support behind them and a proven business model. In addition, the era of COVID-19 presented multiple government programs to support ownership. The result is growth in franchising communities.

Creating success is a team effort as franchisees wear many hats. A vital part of creating a successful and mutually beneficial franchisor-franchisee relationship is timely financial insight. Many franchisees rely on a traditional CPA to deliver their financials, but find that the accounting industry is falling behind in terms of technology and cannot provide the monthly reports in a timely manner. Others may resort to do-it-yourself accounting, which cuts into the time that could be spent on sales, marketing and other activities to grow the franchise.

The solution lies in the digitization of traditional services, such as expert cloud-based bookkeeping and accounting. This gives valuable time back to franchisees and provides timely, actionable insight to franchisors, which helps them work together to expand the business.

 

Digital Transformation in Franchise Financials

When cloud-based accounting is paired with the support of an expert accounting team, franchisees enjoy innovative solutions for their financial needs, including digital bookkeeping along with bank and credit card reconciliation — all done through a tax-saving lens. Each month, key financial reports are generated in their online accounting platform in a timely manner and available to be sent out to the franchisor.

A vital part of creating a successful and mutually beneficial franchisor-franchisee relationship is timely financial insight.”

For franchisors, timely access to franchisee financials presents the opportunity to understand top-performing trends and best practices. This also enables franchisors to provide guidance and insight to support the growth and success of their franchise community.

With the modernization of business, traditional accounting services are falling behind in supporting companies due to a lack of expertise in technology trends in digital-first industries. Non-specialized CPAs may lack the specific knowledge required for franchise bookkeeping, technological connectivity, and time to support the franchisee.

Traditional accounting also requires high proficiency and time to accomplish all the necessary tasks. If the franchisee chooses to do their own accounting, it could take time away from other activities essential for growing the business.

By pairing cutting-edge software with expert support, cloud-based accounting provides franchisees with accurate, up-to-date financial data. Franchisors are able to focus on expanding their franchise, while the finance experts behind the accounting platform deliver timely insights each month. Franchisees can also use the real-time information to make informed business decisions and seek support from franchisors as early and often as needed.

 

“A vital part of creating a successful and mutually beneficial franchisor-franchisee relationship is timely financial insight.”

Accuracy in Item 19

In addition to bolstering franchisee success, timely financial insight helps franchisors answer the number one question asked by prospective franchisees: “How much money will I make?”

To respond to questions about profitability, franchisors need to consolidate data from franchisees’ Profit and Loss Statements for Item 19. Item 19 is the franchisor’s opportunity to make oral or written representations about the financial performance of their business and the average net profit of their franchise community. Accuracy is critical to establishing trust and transparency in the sale process to new franchisees.

In IFA’s 2021 Economic Outlook for Franchising, FRANdata projected franchise employment to produce nearly 800,000 jobs in the United States by the end of 2021, with franchise establishments increasing at a rate of 3.5 percent. With more and more individuals exploring the franchise space, franchisors have the opportunity to attract new, qualified and forward thinking franchisee candidates.

Detailed financial disclosures instill a sense of trust and honesty, enabling franchisors to secure the ideal franchisees for their growing franchise community.”

Including Item 19 enables franchisors to provide a complete picture of their franchise’s financial health and set a standard of transparency, while remaining compliant with franchise laws. It gives potential franchisees a data-driven estimate of how profitable they could be by joining the franchise, and enables them to weigh their options and make an informed decision. Detailed financial disclosures instill a sense of trust and honesty, enabling franchisors to secure the ideal franchisees for their growing franchise community.

 

Looking Ahead

Accurate and timely financial information is the key to unlocking success for franchisors and franchisees alike. Franchisees thrive on flexible, personalized bookkeeping and accounting support for financial compliance and the reporting necessary to grow their business. Franchisors depend on streamlined reporting to disclose revenue and profit information to prospective owners and provide key performance indicators for new franchisees.

As the business world undergoes a digital transformation, cloud-based accounting offers modern franchise businesses the tools they need today to prepare for tomorrow.

Lil Roberts is CEO and founder of Xendoo, a cloud-based fintech company that specializes in online bookkeeping and accounting for small businesses. For more information about International Franchise Association (IFA) supplier member Xendoo, visit franchise.org/suppliers/xendoo-inc.

Lil Roberts in Inc magazine

Lil Roberts: Featured on Inc. Magazine

Capital Ideas

Coming to the table

November 2021

“I believe you have an audience until you lose them, and if you lose them, you can’t get them back. Talk about the problem, your company’s scalable solution, the company’s traction and stage in the life cycle, and the market size within three minutes. If you’re unable to share those details in under three minutes, you may need to improve your clarity.” Lilian Roberts. Founder and CEO, Xendoo.

 

White female business over pointing at a computer and speaking to her white male employee

Xendoo vs. Pilot: Comparing Online Bookkeeping Services for Small Business Owners

Bookkeeping is critical to the financial health of every business, but business owners rarely have the time (or desire) to manage it themselves. To take their time back, many business owners choose to outsource their bookkeeping and accounting. There are many options available, from traditional CPAs to tech-savvy online companies. So, how do you choose the right financial partner for your business?

Today, we will take a look at two popular providers: Xendoo Online Bookkeeping and Pilot. Both provide quality online bookkeeping and tax services, but there are some key differences in features that will help you weigh your options:

  • Online bookkeeping and tax services 
  • Accounting software 
  • Accounting methods

In this blog post, we will explore these key differences so that you can make the best choice for your business!

Online Bookkeeping and Tax Services 

Most of Xendoo’s online bookkeeping packages are tax-inclusive, with prices starting at $295 per month. Plans can be paid monthly or annually, whichever works best for you. We reconcile your books weekly, and deliver your reports as early as the 5th business day of the month, depending on the plan you select!

Pilot offers three online bookkeeping plans, with prices starting at $599 per month, all of which are paid annually upfront. Tax services are available at an additional cost and must be purchased separately.  

If you are behind on your bookkeeping, Xendoo and Pilot also offer catch-up services so you can get previous months’ books in order! 

Accounting Software

Most small business owners manage their finances in a variety of ways, the more software options, the better! That is why Xendoo works with both Quickbooks Online and Xero. Depending on the nature of your business, one of these options will be able to meet your specific needs. 

 

Pilot only offers Quickbooks Online. If you are already working in Xero, they will have to switch you to QBO and leave your history behind. While QBO is a solid option, it may not be the ideal choice.  

Accounting Methods

Accounting methods determine when income and expenses are recorded in your financial statements. They affect how cash flow, profitability, and business performance are tracked. The method used depends on your business and tax needs. 

 

Xendoo and Pilot use different accounting methods, with one exception: cash basis accounting. Depending on the plan you select, Xendoo will use a cash basis or modified accrual basis. Pilot defaults to an accrual basis on all plans, but you can request a cash basis. 

 

  • Cash basis accounting is a method in which revenue is reported only when cash is received, and expenses are noted when money leaves your account. It is often used by small businesses because of its straightforward nature. 
  • Accrual basis accounting records income once it is invoiced to the customer and records expenses once the bill is entered (even if it has not been paid yet). This is a complex method, used mostly for businesses with $5 million or more in annual revenue.
  • Modified accrual basis accounting combines the best aspects of accrual and cash basis. It recognizes prepaid expenses and offers accrual for inventory and other Balance Sheet categories.

 

As accrual basis accounting is the most complex method, it is the most expensive and time-consuming method to complete. Even if your business needs to account for inventory and accounts payable and receivable, the accrual basis method may not be necessary. The modified accrual method can meet your business needs in a cost-effective and timely manner. 

 

We recommend speaking to your accountant to determine the ideal accounting method for your business. 

Try Us Out

Xendoo offers a free trial in which we complete your bookkeeping from the previous month, plus the Profit and Loss Statement and Balance Sheet, so you can experience the Xendoo difference for yourself. If you decide that Xendoo is not the best fit for you, we will gladly connect you with others in our network so you can find your ideal financial partner. The data and reports are yours to keep in your QuickBooks Online or Xero account. If you choose to partner with us, you will have access to a comprehensive customer portal, with data-driven visualizations, and your financial reports at your fingertips 24/7.

 At this time, Pilot does not offer a free trial. They do weekly demos where business owners can tour the platform and ask questions.

 

For a brief summary of how Xendoo and Pilot compare, check out the chart below:

 

Who is Right for You? 

It depends! Every business owner needs financial visibility into their numbers for effective decision-making and growth. If you are looking to simplify your books, Xendoo is the best choice for timely, accurate, and worry-free bookkeeping, accounting, and tax services for you and your business. 

In Q4 2021, Xendoo will launch XendooPayroll, powered by Gusto.

Xendoo is a team of real people that care about you and your business. Allow us to handle the hassles while you put more money in your pocket, reduce your stress, and get back to doing what you love. So, are we a fit for your business? Let’s talk! Schedule your free consultation today!

Uncertain Environment in Business concept - man working at laptop looking thoughtfully out window

Lil Roberts on Navigating an Uncertain Environment

A Precarious Spot for Small Businesses

In an article for Entrepreneur, Xendoo CEO and founder Lil Roberts talked a bit about how each outcome of the 2020 election could affect small businesses. She also offered some strategies for small business owners to negotiate the uncertain environment surrounding the election. While the election has since been decided, the challenges triggered by the pandemic are still putting small businesses in a precarious spot. Lil’s advice remains essential for business owners looking to navigate this minefield.

Maintain a Laser Focus

In times of uncertainty, Roberts says, “[b]usiness owners are well served to…focus on what they do best — running their business.” Specifically, ignore the things that are beyond control and avoid reactive decision-making. Instead, key in on things like expenses, cost control, and overall financial management. However, this doesn’t mean to stick one’s head in the sand. Small business owners should also have contingency plans in order to stay nimble and be able to adapt to changes that may arise.

Get Back to the Basics

“Business owners with the strongest foundation are the ones who survive challenging times,” says Roberts. “This includes building a positive company culture that values every team member, prioritizing interactions with customers or clients to deliver exceptional products and services, and monitoring the financial health of the business to quickly make decisions as the economic climate changes.” With so much going on in the world, it’s very easy to lose sight of these basics. However, they are critically important in an uncertain environment.

Stay Positive and Move Forward

The past election cycles, the pandemic, and the uncertain environment – Roberts calls these “energy vampires to small business owners”. She adds that, “a positive outlook and a focus on the future go a long way in ensuring their business remains resilient. Time will pass and the world will keep moving. A positive outlook is integral in keeping their businesses moving — onward and upward through uncertainty.”

We Get Small Business

Lil Roberts experienced the shortfalls of the archaic accounting industry first-hand. Her one goal: provide small business owners with financial peace of mind. How? Provide accessibility to expert CPAs, predictable pricing, and speed to financial numbers delivered through technology. Xendoo’s proprietary technology allows our expert bookkeeping team to 10x the productivity of a traditional bookkeeper and CPA. In partnership with Xero, we offer a monthly bookkeeping solution driven by real-time data and most importantly, real people.

South Florida Tech growth concept - Sunrise over Miami

The Sky is the Limit for xendoo, South Florida Tech Economy

On the Verge of Explosive Growth

A recent article by Citybiz profiles our own Lil Roberts. It touts the dramatic growth potential of both xendoo and the South Florida tech economy. While many other businesses have been hit hard by the pandemic, xendoo has seen a sharp swell in revenue. Additionally, staff size has grown to 28 employees and we’re looking to fill seven new positions to further develop and support our financial services for small businesses. To date, xendoo has garnered $3.5 million in venture capital. This includes funding from high-profile angel investor Jason Calacanis, as well as winning Steve Case’s “Rise of the Rest” competition, the start-up competition at Miami’s annual eMerge Americas conference, and the VilCap Finance Forward award.

A Unique Moment for the Regional Business Community

Lil, a serial entrepreneur who launched the Fort Lauderdale-based financial technology “fintech” company prior to xendoo in 2017, believes that South Florida is on the verge of explosive growth as an entrepreneurial, technology, and start-up hub. She says, “[w]e’re in a unique moment for our regional business community and overall economy, writing a special chapter that will define this area for generations.” Over the past year, COVID-19 has driven massive numbers of financiers and entrepreneurs from the dense metropolitan areas of California and New York here to southern Florida.

Ideal Conditions for Progress

However, that’s just the catalyst. Lil points to the fertile environment South Florida offers as a support system to these folks. Almost 60 colleges within a 50-mile radius of Miami educate over a quarter million students per year. Additionally, there are a number of organizations and events, many of which Lil is involved with. These include Start Up Grind, Sup-X, Coral Springs Innovation Day, and the Nova Southeastern University State of Innovation panel.

Entrepreneurs Organization South Florida

Lil has also been a member of Entrepreneurs’ Organization South Florida (EO SOFLO) for 12 years. Forbes calls EO “the Justice League of the entrepreneurial world” and the South Florida chapter is one of the largest, with more than 200 members who run businesses with 10,000 employees and more than $2 billion in annual revenue. Quoted in the article, Jason Loeb, president of EO SOFLO, says, “Lil has profoundly sharp vision and drive…She’s everything an entrepreneur and leader should be and personifies the core principles of EO.”

We Get Small Business

Lil Roberts experienced the shortfalls of the archaic accounting industry first-hand. Her one goal: provide small business owners with financial peace of mind. How? Provide accessibility to expert CPAs, predictable pricing, and speed to financial numbers delivered through technology. xendoo’s proprietary technology allows our expert bookkeeping team to 10x the productivity of a traditional bookkeeper and CPA. In partnership with Xero, we offer a monthly bookkeeping solution driven by real-time data and most importantly, real people.