FloQast: Taking the oh so sexy world of audit workflow management to the cloud
If the best startups are built out of solving their founder’s problems, then FloQast is bound for big things. The nine-month-old, cloud-based audit and accounting platform company was founded by Mike Whitmire, a former Senior Accountant at $2 billion SaaS giant Cornerstone OnDemand, who was part of the team to shepherded the then-private company through its 2011 IPO.The IPO was an eye opening experience that, like Whitmire’s earlier role as a Senior Auditor with Ernst & Young, brought to light a number of inefficiencies and recurring processes in the audit workflow that he felt could be automated to save time and reduce the possibility of error. FloQast was built to do just this.
An IPO and the accompanying audit, is an arduous process for even the most well-managed companies. But this is only exacerbated by the fact that no dedicated project management software exists to organize or optimize the process. Some companies duck tape together solutions using ill-fitting platforms like Basecamp, Box (or Dropbox), and Excel, Whitmire says, but the fact that these workarounds exist at all was evidence enough that there was a problem in need of a solution.
Auditors are nothing if not regimented. For example, all audits feature what is called a PBC List (provided by client), which lists the hundreds or thousands of individual documents requested by the auditor as part of their review. Consider it like a bit like the world’s most unpleasant to do list. (tjebjkalhteioyerrrrrrrrrrr rrrrrrrrrrrrrrrrr htherlehertttttttttttttttehlreuouge hhhhhhhhhhhhh hhhhhhhhhhhhhh hhhhhhhhhhhhhhhhh hhhhhhhhhhhhhhhhhh hhhhhhhhhhhhhhhhhhhh hhhhhhhhhhhh hhhhhhhhhhhh hhhhhhhhhhhhhhh hhhhhhhhhhhhhhhhhhh hhhhhhhhhhhhhhhhhhhhhhhh hhhhhhhhhh hhhhhhhhhhhhhhhhhh hhhhhhhhhhhhhhhh hhhhhhhhhhhhhhhhh hhhhhhhhhhhhhh hhhhhhhhhhhhhhhhh – sorry I fell asleep for a minute.)
The point is, these documents must be culled from across multiple departments within a company and organized for an auditor’s review. And because the auditor charges by the hour, the simpler one can make this process the better. It’s not only the auditor’s extremely expensive time which is saved through FloQast. The platform can reduce the load felt by the members of a company’s finance, accounting, and management teams, all of whom presumably have non-audit related work that they could be doing with this additional time.
FloQast ads PBC and other workflows into the cloud, making it accessible to all relevant members of an audit team. Audit managers can delegate to do items and set follow-up reminders and alerts to monitor progress. The platform also adds document management capabilities, so that a company can store and link the corresponding file to each PBC List entry for easy access by the auditor. Companies using FloQast can also assemble the PBC list and other essential items on a rolling basis throughout the quarter (or year), meaning that the final weeks before an audit no longer need to be a mad scramble to get organized.
The company will target customers in the range of 50 to 1,000 employee initially, with the goal of moving upstream to larger enterprises as the platform and its underlying infrastructure develops further. FloQast launched into private beta in July with three mid-size corporate customers, each of which have already agreed to begin paying for the software in 2014, Whitmire says. SaaS licenses will be priced at $1,000 per user, per year for basic access, with an as-yet-unpriced upgrade required for access to certain document management features.
FloQast is a member of the Fall 2013 class of Venice’s Amplify.LA accelerator. For Amplify director Jeff Solomon and others in the local ecosystem, the company is a welcome addition to the rapidly growing SoCal SaaS exosystem.
According to sources with knowledge of the deal, FloQast is in the early stages of raising a $500,000 convertible note at a $3.5 million cap. The company has raised $50,000 to date via its participation in Amplify, in addition to the bootstrap financing contributed by Whitmire and his family. Since first forming the company in January, Whitmire has added a second co-founder, CTO Cullen Zandstra, and the pair have hired their first employee, former Rothstein Kass auditor Chris Sluty.
The biggest challenge for the young company is going to be inertia. For a process driven industry like audit and accounting, predictability is key and change is the enemy. While plenty of people in the field dislike the current system, few recognize that it could be improved upon or are willing to risk their company’s audit compliance testing out something new. There will be a ton of education required with each early sale, Whitmore concedes.
Both fortunately and unfortunately, there is little competition in the market today. Larger companies like NetSuite and have targeted what’s called the “General Ledger” layer within the accounting stack, but no one yet has solved workflow management. While a greenfield opportunity can be lucrative, it also means additional work in educating the market as well as validating the opportunity among potential investors and employees.
FloQast is a seemingly obvious solution to a wide reaching problem. In that regard, it should be a no brainer. The company has a long list of product enhancements that it wants to incorporate, as well as new ones being added daily by its beta customers. In the near term, however, the bigger challenge is likely to be sales and marketing related. FloQast is in the midst of a land grab, whether its founders recognize it or not, meaning that moving fast will be of utmost importance in the next phase.
Software has solved sexy and mundane business problems alike (ok most business problems are unsexy), from HR to project management, to marketing automation. Accounting has been largely untouched since the invention of Quickbooks and other more sophisticated general ledger solutions. Audit workflow management is on the laundry list of processes that will eventually be eaten by software. In a virgin category with no clear leader, expect FloQast to make its voice heard along the way.
[Image via BAI]