In this episode of Controllers Classified, Erik Zhou speaks with Jessica Peng, Controller at Invoca, about mastering change management. Jessica shares her experiences transitioning from a Big Four to client side, offering insights into SOX compliance and the nuances of internal controls. She then uses Invoca’s recent revenue recognition system overhaul to highlight best practices and considerations for managing complex change.
In this episode of Controllers Classified, host Erik Zhou welcomes Jessica Peng, Controller at Invoca, to delve into mastering change management. Jessica got her start in a Big 4 helping companies build the right controls as a part of SOX readiness. This experience being audit side shaped her approach to controllership in many ways, including her willingness to push back on her auditor partners now when they have asks that place undue burden on her team and her desire to always balance efficiency and effectiveness in her controls.
Jessica briefly touches on her team structure and priorities, and then dives deep into a discussion on change management, using a two-year journey to implement a new revenue recognition process and system as her example throughout. In this example she highlights:
Ultimately Jessica’s reflections offer a practical roadmap for organizations undergoing major system changes - you won’t want to miss it.
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0:00:01.1 Announcer: Welcome to Controllers Classified, the podcast where we take a deep dive into the dynamic world of controllers, accountants, and finance leaders, and hear how their ever evolving roles are redefining accounting and the future of business. And now here's your host, Eric Zhou.
0:00:23.7 Erik Zhou: Welcome to Controllers Classified. I'm your host Eric Zhou, CAO at Brex. And today we're diving deep into change management in the accounting and finance function. This is something we actually talk a lot about with our customers at Brex, especially in the context of optimizing their accounting close process. And to help me with discussing this topic today, I'm thrilled to introduce Jessica Peng, controller at Invoca onto the show. Like me Jessica spent many years in client service prior to transitioning to industry, and she's seen change management in all of its forms, which have shaped her perspective on the topic. Thanks for joining me today, Jessica.
0:01:03.8 Jessica Peng: Thank you for having me.
0:01:05.4 Erik Zhou: Maybe Jessica start, how did you get into client service and then what drove you to get into the client side?
0:01:12.8 Jessica Peng: I think it just as many kinda young accounting students, your kind of dream you've been told by the people before you to say, Hey, get into the Big Four. It's a really good kinda launching pad for whatever else you wanna do within accounting. And I felt like I just fell into that track like many other people like including you.
0:01:35.6 Erik Zhou: And was that... And were you recruited at your school for that Big Four job? That's what happened to me. Like I was matriculating through my university and all the Big Four were kind of hosting sessions and trying to recruit.
0:01:47.7 Jessica Peng: It's actually a little bit more interesting in my case, it kind of yes and no. The school I was attending my master's at was actually, they didn't have a specific accounting program, so they didn't have Big Four on campus to recruit. I actually had to go next door to another university that had an accounting program and actually went there and talked to the people over there end up getting my applications through that way.
0:02:14.7 Erik Zhou: I grew up in the practice, so I was at Pricewaterhouse for a long time. I spent 11 years there. I spent time East coast, west coast. My time was auditing all kind of like multinational big financial institutions. When you were in the Big Four, did you focus on any particular industry?
0:02:31.8 Jessica Peng: So I was part of the advisory group, so it's a little different. We tend to... Even though I did a lot of audit, we are more specialized audit, we tend to have more of a focus on internal controls over there. So instead of, at least the time when I was there, they just did financial services and non-financial services. So I was in non-financial services, which meant I cover across multiple industries just because I was in the Tri-state area. So New York, Connecticut, and New Jersey, they have a lot of life science. They have a lot of consumer products. So that's kind of where I end up spending a lot of my time in.
0:03:09.3 Erik Zhou: Tell me a little bit about what the major projects were. Were you working on like SOX implementation or was it kind of existing SOX programs and improving them?
0:03:19.0 Jessica Peng: Kind of both. So I've done implementation one on the advisory side to help them think through what kind of controls they wanna put in place, but more so when I spend time on the audit side, it's existing controls and going in there and audit their controls, their business processes. I've done some substantial testing but not to the same extent that you've done, obviously.
0:03:41.9 Erik Zhou: Yeah. When you go through the implementation for SOX, are the companies mostly like going IPO soon and and like they're trying to get ready or are they already public?
0:03:51.5 Jessica Peng: I think they're already public. My understanding is I think you have five years to implement SOX after you IPO, so that gives you some time. And I think companies tend to really take their sweet time with that.
0:04:04.4 Erik Zhou: I think that's actually for companies that qualify under the jobs act. So when you're under the jobs act, you're like small enough so that you don't have to be SOX compliant within the first five years of your operations as a public company. But I think a lot of companies, if you're large enough, by the time you file your second 10K, you need to have a controls opinion attached from your auditor. So for... So it's usually less than 24 months I would say. That being said, for the SOX implementation, if there are companies that kind of like have been public for a while, they didn't need to necessarily be SOX compliant. I mean that year of transition is typically somewhat jarring, right? So like, what were the major, what were the biggest pain points for those clients as they were getting into becoming SOX compliant?
0:04:52.2 Jessica Peng: What I've seen is you kinda need to strike the balance between efficiency and effectiveness. You need to be efficient enough to pass the SOX, but you need to be effective enough to pass the SOX, but then you need to be efficient enough so you don't cripple your operations with SOX.
0:05:09.5 Erik Zhou: And what are the ways that, like, I guess what's an example of SOX crippling your process.
0:05:16.7 Jessica Peng: When you have one of the controls in kinda, especially in the IT, in the system space is you need to do user recertification supposedly every year. And then the... Most of the company can never get it done because to get into that level of detail, it takes hours to review like everyone's roles what things they do, they just always come back, say, Hey, we have so many other things going on in our day job, we just don't have time for it.
0:05:47.9 Erik Zhou: Just for our audience and to make sure we all understand, can you define what user recertification is?
0:05:54.4 Jessica Peng: So basically the purpose of it is really making sure that the users to a financial system like your banking system or your ERP system, that they only have access as needed. And also anyone that left the company should no longer have access. So obviously they should have efficient ways of removing people's access, but people being people, there's always things that could get missed. So recertification is meant to capture those kind of things. People that terminated should no longer have access. People that have transferred should no longer have their old access, things like that.
0:06:31.8 Erik Zhou: Tell me what happens if... Like what's the risk there? Why is that a control that's necessary for SOX?
0:06:37.6 Jessica Peng: It's not necessarily a direct control that's spelled on the SOX, but it's one of the controls that's meant to mitigate a risk of users having... Inappropriate users having access to that sensitive financial systems.
0:06:52.3 Erik Zhou: And, Okay, so when I was in audit, this was actually something that my clients always got control exceptions on. We ended up like, it's very difficult, especially for very large companies, let's say you have a company that has 30, 40, 50,000 employees and they all have different access to different systems. The user recertification, especially if it's manual and you're looking through them, Oh my gosh, it would take an army to review all that once a year. So they do it in like quarterly cycles for different pockets and populations. And they have to thoroughly document it. 'Cause as an auditor I have to have the information readily available to prove that you kind of did the control at the end of the day. Like something I always experienced was, yeah, there were some lapses and then they were like, Okay, then there's this army of other mitigating controls that they would point to. So just outta curiosity, like was that something you also like worked with clients on or were there some end all be all controls that, you know what I mean? Like at the end of the day people need to have backup plans.
0:07:52.9 Jessica Peng: Yeah. Well first of all I would say we're both talking about history. Nowadays with a lot of the automation that's in place, this becomes much easier. For example, if you have a lot of... For the viewers out there, a lot of you guys probably have single sign off. That's a very effective control where if someone's... When leaves and their access gets taken away from their single sign-on, they don't have access to like a million other systems, then that's one of those kind of be all controls. That was much harder to do back probably in our days we're talking about like even 10 years ago, it's much harder to do. So that's one. And then yes, we, even when we're the auditor, we do try to work with our client to figure out what are the mitigating factors that are available. And generally what they try to do is they try to prove that even though this access shouldn't be there, this person never logged on after they terminates tend to be our go-to control right app after we find an exception.
0:08:57.4 Erik Zhou: What about on the financial statement side? So like when it comes to financial reporting, were there any specific controls that were a big focus area for you when you were doing client service?
0:09:07.1 Jessica Peng: I'm thinking maybe more so on the reports themselves generated from the system. Sometimes kind of those you would take for granted that a report coming from the system's gotta be right. And that's actually not necessarily the case when in our audit world.
0:09:28.2 Erik Zhou: I experience that a lot. So when we go through a manual control, let's say that had like some IT dependencies, so we would have someone on the client side and their accounting team relied on a canned report, right? So an automated report coming out of a key system and that's all great, right? The system, let's say the IT controls around the system have tested, they're good, but then on the key report they kind of just take reliance on it. And when I ask them, well where do these numbers come from? They say, Oh, they come from the system. And then I'm like, Oh, but where did this, how did the numbers get into the system? And they're like, Oh, I don't know. This is the report from the system. And that can be a very jarring experience for some of those clients that I used to deal with 'cause they didn't necessarily have all the information and that's like, those are just stories I had. And then oftentimes we would have to do some kind of advisory work with them and then they would go through the change management. Like that brings us to the topic of today. How have your experiences on the client side shaped what you do now as a controller?
0:10:36.0 Jessica Peng: I would say one is having been on the audit site. You kind of have a different level of interaction with your current auditors. So a very good example is if you've never done it, a lot of times people take the words of auditors as Scott, if they ask for something they will boil the ocean to provide it. But having been on the other side, I generally with questions like, Okay, how important is it really what are you trying to achieve? Is this really something you actually need or is it something that you can take an alternative approach to?
0:11:12.6 Erik Zhou: I cannot tell you how much that resonates with me. I was an auditor for a long time and having made many requests of my clients, I didn't appreciate at the time but when I made those requests, often I didn't give enough context that would've been valuable to them. 'Cause there are a lot of requests that I sent out that, I hope I'm not giving away the farm here in case there are other auditors listening, but sometimes those requests are nice to haves, right? It's just, something that if you could give me, I would fill up my audit bucket just a little bit more and make this audit file a little bit stronger.
0:11:51.3 Erik Zhou: But will it stop me or my team or my firm from signing the opinion at the end of the audit cycle? There were a lot of requests. I mean not like everything. Almost, I would say probably like 85, 90% of requests are certainly like must-haves, cash confirms, legal letters, things of that nature. But there were always like these follow on requests that were almost curiosities almost like, just so I can understand and put it in the file. And I think there's definitely something to be said there, having been auditors and bringing that flavor to my team so that we can manage the cycle more.
0:12:27.9 Jessica Peng: Yeah. And another part related to that is even for the ones that are must-haves, they're usually work around it. So kind of keeping in mind what they're looking for, what kinda having a better understanding of what the auditors tend to be looking for. You can better come up with alternatives that probably are just acceptable but way less taxing on your team. A lot of times what I end up pushing back on is materiality. For example, if they're really trying to reconcile like a hundred dollar difference, I'm like, come on, what's your materiality? I know the whole drill with materiality. I know a hundred dollars is not gonna be important and therefore we're gonna request you to waive it. Is more so on the nice to have side, but with kind of the alternative ones, this really comes down to very nitty-gritty that I just can't think of off the top of my head, but it tends to happen a lot. It's important to think about what to ask and to think about what they're trying to achieve. Don't take to say, hey, like this, and there's only one way to roam.
0:13:34.5 Jessica Peng: It doesn't work that way. A lot of times, kind of think through and maybe sometimes, even for people that's not necessarily with an audit background, it's important to think about to ask, say, hey, what are you trying to achieve? Let me walk you through our process. Based on that, is there a way you can request something that's different that will be less taxing?
0:13:53.0 Erik Zhou: I have one pet peeve for whenever I, and when I conducted audits, by the way, I was guilty of this. Now I know better if I were to ever go back to that life. But we send these detailed listings for general ledger accounts that are in scope. So it's a bunch of transactions, and then we give 'em the entire GL listing, the roll forward from beginning of the year to the end of the year. And for an expense account, oftentimes there are accruals. And those accruals are really kind of like estimates, and those accruals typically go in and out. So I accrue $1,000 for this particular account at the end of the month. Beginning of the month, I reverse the accrual, and I wait for the invoice to come in to True-Up the expense. And then what I experience often is the selection of those accruals, and proving out the completeness and accuracy of an accrual can be a little difficult, like discussing that with the auditor. But... Oh, by the way, these accruals all net out.
0:14:56.7 Erik Zhou: Like if you add up all the accruals for the year, they all sum up to zero except for the final accrual on like December 31st or whenever your fiscal period year end is. So to me, that's like an example of when the auditor gives you a request, you don't have to kind of go to the ends of the earth to try to meet that request. You can go back to them with questions and also challenge them on whether or not this makes sense. Oftentimes they don't even know that the amount they selected is an accrual. And so it can actually improve the process as the years go on in your auditor relationship. So I would always... I tell the team all the time, when they're asking you something, and it's not something that you can pull together and call it two to three minutes, let's talk about whether or not they're making the right request or whether or not we can go back to them and make some changes. 'Cause I wish that, and this is when I was in client service too, I would change some things that I did.
0:15:54.1 Erik Zhou: I would always default to, or I should default to asking for things that the client is already doing, right? Because like you're a controller now, I'm the CAO at Brex. There are documents and things that we do to ensure all the numbers are correct. They may not be the same as every other company that the auditor looks at, but that's part of their job to learn what it is that we do through walkthroughs and this process, if that makes sense to you.
0:16:21.9 Jessica Peng: Yeah, I would say kind of two quick advice. One is with those kinds of things, when you do have a customized list that you end up providing, it's good to make internal notes that you provide the same thing next year. And then another one is when there's something that you really struggle with, unless it's a new request, ask for what was provided and acceptable the previous year. Chances are they're gonna be acceptable again this year.
0:16:46.8 Erik Zhou: Yeah. I mean we've had a joke on the podcast from time to time about auditors just kind of looking at the prior year file and doing it again without understanding why. But on the other side, I know as a client, sometimes we revert to that too, right? I would prefer that you kind of take what we did last year 'cause we already have a preparation of those files so that we can have a more repeatable process.
0:17:13.7 Jessica Peng: Also, having been on the other side, just keep in mind different sets of eyes end up being on the audit. So just because it was right the previous year doesn't necessarily mean that it's right again this year. So it's a good starting point, but it's not an end all by any chance. I think you and I have gone on different audit projects and challenged what was done last year. And sometimes just because it was passed before, it doesn't necessarily mean there wouldn't be things that we would as auditors would dig in and find something that got missed.
0:17:47.9 Erik Zhou: I agree with that.
0:17:49.6 Jessica Peng: So just for viewers to kind of keep in mind.
0:17:54.2 Erik Zhou: I think there's definitely a truth to maintaining a level of intellectual honesty, right? If you have that conversation about what was provided last year, you should ask why it's changed. But if there's an intellectually honest response, I think that's fair game at the end of the day and sometimes there's some good that comes out of it for your own process as well, right? How is your team structured today?
0:18:18.9 Jessica Peng: So I actually have my team structure functionally. So I have payroll accounts receivable and billing. It's more for the order to cash process. There's the procurement team, so procurement to pay process, general accounting, and also I have tax and compliance. So it's kind of very functional driven and I make sure each of the functional team is led by a functional expert.
0:18:45.3 Erik Zhou: And then tell me about your main... What are some of your major priorities across these different functions, whether it's for the rest of the year or even into next fiscal year?
0:18:56.9 Jessica Peng: So in general, I tend to work with the functional leads on each of the functions to figure out what the priority is for the function. So for example, one of the priorities for my procurement function this year is on vendor renewals and negotiations to see if we can squeeze some extra dollars out of that. So that will be... But that's a priority specific for my procurement team. One of more kind of cross-functional is we just recently completed an implementation of Zuora revenue. So it's an automatic revenue recognition system that we just implemented and that cuts across my billing team and my general accounting team.
0:19:46.6 Erik Zhou: Are you using Zuora like end-to-end? What parts of your order to cash process are you using the tool for?
0:19:53.9 Jessica Peng: So we use Zuora for billing, which cascades down to the revenue recognition associated with it. Our collections also gets recorded in Zuora, so for the... So my accounts receivable specialist would use that also as to kind of record the cash come in and do the cash application stuff. So I think basically our full order to cash process is within Zuora. Well, order process starts from Salesforce, but then it feeds into Zuora.
0:20:27.7 Erik Zhou: I'm always curious about this on the cash application side. Is that automated between Zuora and your bank that does the collections or how does that work?
0:20:37.1 Jessica Peng: I don't think we do, but again, we are very B2B, so we don't end up with a lot of customers. So that's why we pay extra attention to the application and I think it's mostly manual by choice.
0:20:53.0 Erik Zhou: So before you had zuora, what were you using?
0:20:57.2 Jessica Peng: So we've had Zuora billing forever, but before we had Zuora revenue, we actually was doing... We use Zuora billing's revenue recognition, which is basically how much we bill becomes revenue with like a little bit of adjustment, but anything related to SSP sell... What's it called? Sell...
0:21:18.4 Erik Zhou: Standalone selling price?
0:21:19.5 Jessica Peng: Standalone selling price.
0:21:21.8 Erik Zhou: SSP. Yeah. It's a ASC 606 term. Yeah.
0:21:24.8 Jessica Peng: Exactly. So with regards to those kinds of things, we end up doing a manual calculation, which obviously very taxing on a team and very prone to mistakes. So then that's kind of the improvements behind doing the implementation.
0:21:39.8 Erik Zhou: So it sounds like you guys were getting a bunch of these kind of like non-standard contracts and because you're B2B, so any one of these contracts can actually be material to your reporting and your business on a month-to-month basis. So my experience with this, when you have a lot of non-standard contracts, you typically have a big kind of revenue accounting team that's poring over the contracts to look at the non-standard terms and figure out how to account for them. Walk me through the before and after and how you manage that change. And it sounds like a change for the better, but how did you ensure that the before... How did you ensure that the after of the implementation was still at a high enough standard for recording accuracy?
0:22:27.3 Jessica Peng: So before, what we end up doing is we record during the year, just using Z-billing with a couple of simple revenue principles like oh if it's subscription, recognize it readily over the period. If it's like some kind of work order, we recognize it at the end of the completion. That's kind of just very simple terms. And then at the end of the year, after we finish the fiscal year, before we start to audit, we spend a couple of months with one or two people going over the contract to your... And trying to figure out what the special terms mean and what the corresponding adjustment is with Excel files.
0:23:11.7 Erik Zhou: How did you even find the accounts that were non-standard or had special accounting needs?
0:23:17.8 Jessica Peng: We do a reporting search. So if it's... Luckily, a lot of what we do is pretty standard. Even though we may sell several products, they're all recognized... They're all duration-based. So those we don't need adjustments. What we need adjustments for are the ones that contain work orders. So we do a search to figure out what those are. And do the analysis across that, obviously. I helped the team kind of put together an Excel template to you do this kind of input and then it calculates. So at least the calculation pieces is automated, sort of. But then the identification process still is pretty manual and you have to manually input all that information. And when you do, mistakes can happen.
0:24:08.1 Erik Zhou: So then... Okay, so now you're doing the automated revenue recognition from Zuora like how did that change happen and how long did it take?
0:24:17.5 Jessica Peng: So first, it's very long. It's literally two plus years in the making. The reason being is we started that process with kind of a discovery process. And then we realized that we were not on the most recent version of Zuora to allow for transition between Zuora billing to Zuora revenue. So we had to stop. We had to pause our Z-revenue implementation to do an upgrade of Z-billing. So that took us close to a year to complete. And then once that's done, we then had to pick up Z-revenue again. And because, remember I mentioned before that, we were doing revenue recognition based on Z-billing. And the migration actually caused issues with Z-billing. So that's through even the regular revenue recognition off the window. So what we end up having to reach instead of every year when we just pick the ones that had some components, work orders to do our manual revenue calculation, we actually end up doing the manual revenue calculation for every single subscription that we have, every single customer, every single subscription.
0:25:33.2 Jessica Peng: So it ended up being a helpless effort to do all the recalculation. Only silver lining coming out of it is because we did all the recalculation, the comparison between what it should be and what Z-revenue calculates is already there because you already have what it should be. And then you can do the comparison against Z-revenue to make sure that Z-revenue is calculated as the way it is.
0:26:02.1 Erik Zhou: How is it that... Did you find out mid-implementation of the revenue module that the Z-billing instance needed to be upgraded or did you kind of know that all along, even before you started the process?
0:26:14.3 Jessica Peng: We found out midway.
0:26:16.8 Erik Zhou: Oh man, that's really unfortunate. Is there... Yeah, well, like, is there anything that you could have done? Yeah, go ahead.
0:26:23.1 Jessica Peng: And then we found out after Z-billing implementation that the revenue recognition was completely off.
0:26:28.8 Erik Zhou: Oh no. What are the lessons there? Like what could you have done or what, like what would you have expected to have been done differently? Like looking back?
0:26:40.8 Jessica Peng: I mean a lot of those things kind of, I think the decision that we made long time ago to stay on an older version of Z-billing, we just didn't realize how much it it was gonna haunt us. I would say that's probably the biggest takeaway in that case. I dunno how otherwise, obviously Zuora should have communicated to us that is the case. But also it's probably, if any other lessons learned, I would say if you are on an enterprise system, you probably want to somehow stay on their latest version. 'cause otherwise these kind of things can happen.
0:27:22.8 Erik Zhou: That's actually a really interesting point. I almost see this story about change management as the impact of not doing the change management, right? You hear stories about companies that, they've been around for a very long time and like they still have systems that are coded in cobalt.
0:27:43.9 Jessica Peng: Oh yeah.
0:27:44.0 Erik Zhou: From like... Right. And I mean now you're talking about a computer language or some kind of language from like decades and decades ago and no one even knows the language anymore. And it's tough to...
0:27:53.0 Jessica Peng: The only people that know are retiring.
0:27:55.4 Erik Zhou: Right. And it's one of those things where if you don't do the change management in a timely fashion, you accrue this enormous amount of tech debt such that when it is time to really like where your back's against the wall and you have to make some kind of change in your system, you have so much catching up to do and you do this to your effort to, I'm not gonna brag. This is not a brag, but like, I'll give the other example. And we have the benefit of kind of like implementing all this later on in today's world. But we recently, in the last two and a half years we started our SaaS business 'cause we sell seats or subscriptions to manage expense on our platforms called Empower. And as we were rolling it out, we did the billing and the revenue recognition at the same time on NetSuite. And yeah, the implementation it was a change management process. We had to work with our billing team and then we have to go through the end-to-end design of like, okay, this is how we're gonna get the data from Salesforce into this. This is how the bill's gonna show up.
0:28:56.7 Erik Zhou: This is what customer service is gonna do in cases there are questions, this is how we're gonna do the cash application, etcetera. But the idea is like we implemented that and it didn't take two years. It took like three months call it. And I think those are just two very different extremes where if you have the opportunity to do the change, and you don't want to... And you can afford to do it now and not defer it, I would always recommend that so that you don't kind of fall behind. Right.
0:29:24.4 Jessica Peng: And to be honest, I still consider us lucky. Imagine us trying to do it in five years because it's like, it's only one or two people doing a month work is not the end of the world. So I do credit our CFO for actually making that decision 'cause it could have been a lot worse. Right now we were dealing with like 700, some customers, like thousand, some subscriptions. Imagine double that. I don't think anyone one of us would have any time to rest to be able to get there.
0:29:56.7 Erik Zhou: So when you were going through the updates for Zuora, how did you engage your cross-functional partners and what was the impact like across the business as a result of this?
0:30:09.7 Jessica Peng: So for... In terms of this chronic data cross function, obviously the finance team is involved, so they need to be kind of kept in the loop with regard to when we would actually do any kind of revenue changes. Because with this kind of implementation, we do anticipate Zuora revenues doing it a little bit differently than how we historically did it. We do anticipate like true up, so keeping them in the loop was always important. But more so we really work closely with our business systems team in terms of doing the implementation itself. And they're the ones that run kind of project management on our end. So we had like daily standup meetings one or two hours a day really having them both, having the business system team that will eventually take over managing of the revenue and then us kind of always on the same page about kind of doing that in tandem was really helpful.
0:31:08.1 Erik Zhou: Did you get any pushback from anybody?
0:31:10.2 Jessica Peng: I would say the biggest pushback in this case was actually working with our implementer.
0:31:15.8 Erik Zhou: Oh, interesting. Okay.
0:31:17.6 Jessica Peng: Yeah, 'cause our implementer's very technical and one of the biggest...
0:31:22.1 Erik Zhou: This was a third party consulting service?
0:31:24.6 Jessica Peng: Exactly.
0:31:25.3 Erik Zhou: Okay. Yep.
0:31:26.5 Jessica Peng: So one of the biggest challenge we had early on was actually configuring the system. So when they started configuring Z-revenue for us, they were like, oh, do you want option A or option B? Except we don't understand what option A would do and what option B would do. And this kept happening, this kind of dance kept happening for, I think we had two or three weeks of that with us not able to make any progress. And then I finally like, look, this is not gonna work. We're gonna start with our use cases. We're gonna tell you when a particular scenario happens, we expect the system to behave this way. Let's go over what are the common scenarios and what are the common expected output. And based on that you or business analyst tell us whether we should choose option A or option B. And that kind of unblocked the whole, obviously there were other things, but that was the biggest blocker at the beginning.
0:32:25.9 Erik Zhou: Yeah, I think... And that's something... I mean when we talk to our clients, it's like that when I work with our vendors, it's like that. I often... I think it's always a red flag by the way, when I talk to a vendor and all they're doing is talking about the features of their system. I think that's a red flag because that means, the product's the product. I'm looking for a solution to my problem. Right. And the features they're just like a, it's just like a list of things that it does, but I don't know how exactly it's going to solve my problem. And I think that's where, if I were to give advice to folks that are on the sales side, that you have to find the pain. You have to find what it is that your prospective client, your client is looking to solve. And then you have to connect the dots for them on how it's going to get solved. 'cause otherwise, yeah, you represent to A or B, you're like, well, what does that mean? I don't know how it's going to solve my problem, right?
0:33:22.0 Jessica Peng: I'm sure we're not the only ones dealing with some of those implementers that are very technical. And so then just think about at the end of the day, they are here to solve your problem. It's not our responsibility to tell them if it's A or B. And honestly, if we know, we can do it ourselves. Why are we paying them to do that implementation? We know all the answers. We actually pay them to figure out how the system can be configured to fit our specific process.
0:33:55.4 Erik Zhou: You mentioned that your CFO was the one that kind of made the call, even though it would be call it what? A two-year project. What did that executive sponsorship look like? And tell me how that worked in the company, so to speak.
0:34:10.2 Jessica Peng: Yeah, so executive sponsorship, obviously at the beginning, it's approving the budget that's needed to kind of do any kind of change in management. Obvious, a lot of times it's implementing a new system, but sometimes also potentially upgrading a role or adding a new role. So I would say the first piece is definitely the budgetary support. And honestly, I think that's the biggest piece, especially as we kind of obviously when he first signed off, he didn't know that was going to be a two-year project either. But also the other piece of executive support is the continuous support of one is you understand when people take on a change management, they will have to make some sacrifices on their day-to-day job. So for the executive team need to understand what that means. It could be like, oh, your month-end close is going to be a day late because your team's working on something else.
0:35:08.8 Jessica Peng: So having that understanding of the implication of change management, not just in terms of on the things being changed, but also the implication in terms of prioritization would be really important. And then the other piece kind of resource management, obviously there's the initial budget that you approve, but also similarly as we go through the discovery process to understand, oh, some of the things that you might not have planned out, like whether that means, oh, we need additional man hours, we need to go hire a consultant to kind of support this. That's also equally important because you can't expect people to deliver something when they don't have the right resources to support it.
0:35:52.2 Erik Zhou: So you had real commitment on this top down. Obviously, and I've experienced this too, it's really important to do that, especially for such a significant project that's gonna take such significant resources... And frankly impacts the company so much because without your billing system and the revenue recognition, you don't have the top line numbers or collections that you need to actually be a business.
0:36:13.3 Jessica Peng: Yeah, I would say one other thing I wanna add is also whoever the executive support need to understand that people make mistakes, or like unexpected things can happen. Keep an open mind to that rather than people going to it and then you just say, hey, you're like scolding them for making the mistake. You really want to encourage them say, hey, what did you learn from it? And then also encourage them, say, hey, I'm glad that you let me know now instead of like three months from now. I remember an audit partner who had a famous saying says, bad news doesn't get better with age. And I think it's super important to keep that in mind. And...
0:36:55.6 Erik Zhou: It gets worse, actually. It starts to rot.
0:37:00.2 Jessica Peng: Exactly. Exactly. And I think it's really, it's a very timely saying and just you need to kind of ask the executive, obviously it's never good to have the bad news, but keep an open mind and really encourage people. Just think about you dealing with your parents, when your parents kind of scold you and everything, you're not gonna... You aren't gonna wanna hide like whatever bad thing as long as you can, right? So as an executive kind of keep an open mind to encourage that would actually help the entire company because people will be more willing to come to you when things go wrong and they will come to you in a more timely manner. And that would really kind of save time and effort in the long term.
0:37:39.4 Erik Zhou: So two years project is implemented. I'd love to understand if it solved everything or what are the things that are still hanging after the implementation?
0:37:56.0 Jessica Peng: I would say with more automation, it's in general, it's obviously better, but then that also means sometimes before that, when obviously you're always going to have anomalies, right? You sell, people always have to come up with creative ideas to sell the product, but sometimes that creates kind of downstream effect of billing set before, when that kind of things happen, billing just does whatever to kind of maneuver. And now you have a revenue system that's sitting further downstream, that something on the billing side now cascades down to create anomalies on your revenue side. And so before that, maybe the impact wouldn't be as big when you do this kind of maneuver, now it's bigger because that creates anomaly on the revenue side that you now have to catch and adjust accordingly.
0:38:52.2 Erik Zhou: This sounds like one of those situations where actually when you're working in Excel, the system, which is spreadsheets, it's so flexible that every single instance that you run through your system, you can handle in Excel. But when you automate it, even though you save time individually for every single one, 'cause you're not doing the manual work. Whenever there is a one-off, it takes extra time to kind of configure that one contract in the system system or to do a separate process, etcetera, right. 'Cause you're not used to it anymore. Like, is that the right way to think about it?
0:39:27.0 Jessica Peng: Yeah, absolutely. You can never... You never should automate in a way that doesn't allow exceptions is the best way I would describe it.
0:39:36.9 Erik Zhou: Yeah. That makes a lot of sense. So having been in client service and there's oftentimes a kind of persona that I've experienced from those people who are in client service and now that you are managing your own team of accountants and doing the controllership, I'm curious like how you think about team management and what's your definition of a high performing team?
0:39:57.1 Jessica Peng: That goes back to how much I think Big Four really shapes and I think it's in a really good way. One is encourage people, a lot of times you encourage your team members to step up. So that means maybe, I have my even just kind of accountant managing our accounting intern, right? So they're like, Oh yeah, I don't have manager in my title, but guess what, now you have a junior team member that look up to you and you are gonna be their go-to person. So I think this part of encourage people to step up really comes from the Big Four culture. And then the other part is where you, just with that also it's helping your team career pathing, kind of seeing for individual team members, where do you wanna go and figure out a way to try to accommodate that. With that said, obviously if you have a job that needs to be done first, but keeping in mind where they wanna go to help work with them collaboratively on their career can really go a long way in terms of retention, but also in terms of people willing to not just do 80% to give you 100, even 120% because when you think you have their best interest at heart, they will kind of, will do more. Well, they will also go above and beyond.
0:41:21.0 Erik Zhou: I often think about my team obviously from a perspective of getting our deliverables accomplished. So we have tasks every month. We have reporting, we have week to week stuff. But another thing I always stress is giving everyone stretch opportunities. I always wanna have some kind of stretch opportunity for every single person on the team because they need to be able to upskill themselves. They need to be able to grow their career. I want that for them. I don't expect any of them to be in the same job that they're in, call it two years from now. And so, that to me is like how I try to drive a high performing culture, if that makes sense. And I will say one other thing, the thing that happens is, oh, when that happens, they'll expect a promotion or they'll expect, because they've exceeded expectations.
0:42:09.0 Erik Zhou: If they hit a stretch goal, then it's something that they put on their performance review or self review over the past year. And that's the one thing. So there is often this sense that I'm in this role for two years, so I have to be ready that in two years I have to find someone else. But I'd rather have that and get kind of the next best athlete, so to speak, in the seat. And hopefully that person matriculates maybe, hopefully gets promoted within the team, but oftentimes it's actually somewhere else in the company. I've had that too, like accounting folks go into finance or even some go to our credit team here in other areas. And I really enjoyed that in this role at Brex.
0:42:53.6 Jessica Peng: Absolutely. On the other hand, another thing I learned, kind of contrary to that is it's really dependent on what they want. I have obviously have team members like exactly like you said, like want to get next step, wanna go next level. But there's also team member who's happy with the way they are. And I think as long as they are concrete, they're still delivering. That's not necessarily a bad thing. It's the stretch goal is good, but only in terms of the things that they enjoy doing. I've had one team member who's like really enjoys billing, but I was like talking about stretch, go say, Hey, billing collections kind of go side to side. And he's like, "No, I don't want anything to do with collections." And sometimes you need to respect that.
0:43:37.7 Erik Zhou: I agree with that. It's definitely a balancing act in terms of managing your team and the different personnel that you have. Jessica, this has been a great conversation. I love all your stories about your journeys with Zuora and implementing the new billing and revenue recognition process. We always end our podcast with a section called Finance Leaders are Fun too. And I'm just wondering if you have any funny accounting stories or jokes to share?
0:44:07.3 Jessica Peng: I'll probably, and with a kind of on a Big Four, I think it's pretty common among the Big Four people. We always joke about that. And actually kind of, there's reality to that is whenever you tell people that you work for an accounting firm, they automatically ask you tax questions. Even though like you... Like a lot of us don't even do our own tax return just for perspective. They ask you tax questions, they assume you do tax returns.
0:44:36.6 Erik Zhou: Okay. Yeah. I'm Chinese too, right? And I know you're Chinese. And when I told my parents that I was gonna join Pricewaterhouse, first of all, they've never heard of PricewaterhouseCoopers. And then I was like, and they're like, "Oh, what is that?" And I'm like, "Oh, it's an accounting firm." And they're like, "You're gonna do taxes." I'm like, "No, I'm gonna look at the financials for a company and then I'm gonna make a report and all that." And they're like, "That's the tax return that I get every year from my CPA." And I'm like, "Okay, yeah, I'm gonna do taxes." And sometimes it's not worth talking about it with my parents. I mean now they know, like almost 20 years down the road. Like they understand that it's a little bit different. But that's funny.
0:45:22.0 Jessica Peng: I think it sounds like it's pretty common across all Big Four that we run into that. And even though if you look at just Big Four accounting firm, taxes like 30% of what they do. Somehow that...
0:45:33.5 Erik Zhou: Yeah. I mean. It's not significant, but it's definitely, yeah, for sure.
0:45:37.2 Jessica Peng: Yeah, that represents 100% of that.
0:45:39.6 Erik Zhou: Yeah. Jessica, thank you very much for joining the show today. Really enjoyed talking to you and thank you for all your insights.
0:45:47.4 Jessica Peng: Thank you for having me.
0:45:50.3 Announcer: Thanks for tuning in to Controllers Classified presented by Brex. Brex is an AI powered spend platform with global corporate cards, expense management, reimbursements, and travel. Visit brex.com and follow Brex on social to see how they can take your accounting game and your company to new heights.