Companies preparing to file for an IPO need a solid financial foundation well before submitting form S-1 and the prospectus (aka the red herring). In fact, three years of audited financials are among the many requirements, and everything will be subjected to close examination by the Securities & Exchange Commission along with the public. ASC 606 is a relatively new revenue recognition standard that can trip up software and technology companies as the deadline for non-public entities to implement this standard was mid-December 2018. It can be especially tricky during a software IPO. Compliance with ASC 606, EITF 08-01 and 09-03, and a host of other standards is necessary to function as a public company. To further complicate things, public companies are required to issue quarterly reports to the SEC, investors, and the public so speed and accuracy are critical. Elimination of manual reconciliation and as many other manual processes as possible is vital to a successful IPO.
How can NetSuite help organize your company’s finances before an IPO?
NetSuite ERP is the perfect financial multitool for the IPO preparation process. As proof, around one-third of companies that filed for IPO between 2017-2018 were NetSuite customers, and that number continues to grow as you read this blog. Companies with NetSuite receive access to a robust compliance foundation that includes a wide variety of reports and certificates to address risk and control expectations while also ensuring accuracy. It comes equipped with continually updated audit trails that can be customized and quickly investigated by auditors and management to uncover activities that may impact controls, financial statements, or security.
Specifically regarding ASC 606, NetSuite is a subscription-based software company, so it has first-hand experience with challenges adjusting to this updated standard. As a result, NetSuite ERP software was updated to address ASC 606, so it is easier for customers to manage this complex process. NetSuite also includes tax compliance across more than 50 countries and multi-currency management support for nearly 200 currencies and exchange rates for companies operating internationally.
In addition to compliance, NetSuite ERP can help eliminate manual and inefficient reconciliations and financial close processes. Companies can synchronize complex order, billing, and revenue recognition processes with fewer errors, and in a more timely manner. The financial reports are flexible as NetSuite’s Financial Report Builder enables users to customize reports for any requirement. And each report contains real-time data. Increased efficiencies and accuracy will alleviate the stress that comes with preparing for an IPO, and with issuing the quarterly reports once the company is public.
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