August has been a month of continuing good trends: increasing revenue and remaining cash flow positive. We’re also examining a lot of our internal vendors, tools and team participation to ensure everything is in a good place.
Here’s a bit more behind the scenes of our People Operations team:
Finance update: Cashflow positive, tweaking forecasting model
As a 80-person team, it’s interesting to see how our expenses are organized. Our expenses for August were $910k, with the largest part in salary and benefits.
After our cashflow crisis in June 2016, we’ve reduced hiring and suspended some perks. As a result, we’re cash-flow positive for the second month running, with +$67k last month and +$149k this month. We are feeling better about this trend!
One of the big question we’ve been pondering is about forecasting revenue:
In our cash forecasting tool, we want to record everything on a “cash basis,” meaning that for revenue, we only record money that hits the bank on a given month. We also run accounting in parallel to make sure we account for revenue the proper way (accrual basis).
Here’s the tricky part: In July, we made $875k in revenue (what landed in our bank account), and then had another $105k pending from Stripe transfers. These are a direct consequence of our July activity, but those funds haven’t hit the bank just yet.
For instance, money that was paid by our customers on July 30 may not hit the bank until August 2. So it’s unclear whether that money should be recorded in July (when it’s made) or August (when it’s received).
The dilemma here was to choose between:
- having a consistent model and
- having a better representation of our reality.
For 1, we haven’t modeled those pending Stripe transfers in the previous few month, so it felt odd to see that the work we’ve done thus far wouldn’t be an easy benchmark anymore. We tweaked it to have a good idea about previous month from August onward.
For 2, the most important part of cash management is to show “what is,” and it feels to us that cash pending in Stripe, PayPal & Apple accounts is as good as if it was in our bank account. (We trust those partners will wire us owed amounts! ? )
Also, if you want to project any growth rate forward on what you’ve done so far, it’s harder to do with inconsistent months due to early/late cash transfers — so we’ll now include money we made for a given month under “cash receipts.” We also keep the old way we had to calculate if for our reference. Special thanks to Mark McLeod for weighing in here!
When it comes to other payments, such as checks, we won’t quite account for those unless they are cashed. They feel less liquid and less certain than Stripe transfers.
We continue our efforts to go back to a healthy and positive cash flow! We’re still looking for a finance director—find out more on our Journey page!
Operations update: 401k reachouts, introducing eShares
In 2016, we starting offering US team members the ability to set money aside through a 401k program powered by Captain401. We’re now reaching out one-on-one to team members who have not yet participated to ensure they feel sufficiently informed so that they can make an educated decision on whether they feel like contributing.
Also, we’re introducing eShares as a stock option management tool. This will help our operations team assist team members and investors with issuing certificates, and knowing a bit more about when options vest. Just like Zenefits, eShares has a login that is independent from your work emails—meaning that those who move on to other adventures after Buffer can still keep up their accounts.
Another initiative we’re exploring is managing costs of software subscriptions and various services. We’re currently reviewing around 70 vendors to make sure we make the most of what we have, decide what is critical and adjust when needed.
Over to you
Is there anything you’d love to learn more about? Anything we could share more of? We’d love to hear from you in the comments!
Check out more reports from August 2016: