When John Cappadona joined School of Rock as CFO about four years ago, he saw a number of ways for the finance team to become more efficient. And this was imperative, given the growth that was to come. School of Rock, which uses a patented teaching method to prepare young musicians for live performances, had 23,000 students when Cappadona came on board. Now, enrollment exceeds 55,000. The company ran about 200 music schools worldwide back then, and the count is now 300.
School of Rock had used NetSuite OneWorld(opens in new tab) for about eight years before Cappadona’s arrival. While NetSuite was an improvement over the company’s previous system, Cappadona recognized that as School of Rock grew, it could take better advantage of OneWorld in a number of ways.
Journal entry automation: One of the first orders of business was creating templates for journal entries(opens in new tab). Team members had been creating manual journal entries for recording intercompany transactions. With 10 entities and many of the same transactions occurring between the same schools every month, the work piled up. With the new journal entry templates, details like the entity and GL account stay the same, and the team simply tweaks dollar amounts. Cappadona called the improved process “a huge time-saver.”
Payroll automation: Next came automating payroll uploads. School of Rock uses a third-party payroll system, and previously, it took a full day to download files from the system and upload them into NetSuite. The team developed a workflow to have NetSuite automatically import payroll data in a couple of hours.
Simpler international billing: School of Rock charges monthly royalties to each of its franchises, which are spread across 14 countries. NetSuite automatically bills each franchise, then a third-party payment system collects the funds. In four countries, School of Rock has parent franchises. In the past, receivables for each sub-franchise would remain outstanding in the system even after their parent franchise had paid in full. The team adjusted its use of NetSuite to manage that in a parent-child relationship, which Cappadona said has “helped tremendously.”
Easier, more frequent recording: Cappadona further maximized the team’s use of NetSuite for reporting. With hundreds of music instructors paid hourly to teach lessons each week, with variable schedules, Cappadona closely monitors labor as a percent of revenue. Twice per month, he uses NetSuite to pull a report showing this metric by location, by year and compared with budget. Then, he addresses any abnormally high or low costs with his operations team.
And, a custom-built, automated report informs a monthly board package by summarizing every general ledger account by school location. That report became even more useful when the team started including monthly forecasts in 2020.
“We wouldn’t have been able to do that without NetSuite,” Cappadona said. “We’re a very small team. We had to find ways to get more efficient, or we’d be working around the clock.”
Cappadona runs about six reports monthly, drilling down into transactions to ensure costs are correctly capitalized or expensed. It’s important to Cappadona to ensure the IT group and professional services accounts, which he oversees, aren’t overstating expenses. The reports inform him if any cost is classified incorrectly so he can address it promptly and stay within budget.
Faster, More Accurate Financial Close
The financial close process used to take School of Rock 28 days — the team “was always closing,” Cappadona said — and occasionally yielded inaccurate numbers, which the team didn’t have time to check and correct before sending in. Now, the financial close(opens in new tab) takes just nine days.
“The fact that we’ve automated more processes gives us more time to go through and make sure we’ve got things correct,” Cappadona said. “That has helped us with the accuracy of the close.”
It has also boosted the finance team’s credibility in the organization, eliminated complaints over inaccurate information and given school general managers confidence that they’re receiving the correct bonus amounts based on P&L results. All the while, the finance team has remained lean. Based on the growing number of School of Rock locations, Cappadona estimates he would’ve needed to double his team’s headcount by now if it weren’t for NetSuite automation.
School of Rock plans to implement NetSuite Revenue Management(opens in new tab) to automatically recognize revenue among its many franchises according to new accounting rules(opens in new tab). NetSuite will help manage each franchise’s contract and recognize the correct amount of revenue over the proper period of time. Tracking all of this in the system, versus the current spreadsheet, will be ideal for audits, Cappadona said.
Meanwhile, School of Rock as a business will continue its ambitious expansion plans, aiming to open schools in three additional countries this year while investing further in its Method App, which is central to teaching the School of Rock Method to burgeoning rockstars worldwide.
Learn more about how NetSuite can accelerate your financial close(opens in new tab) in a free, on-demand webinar.