【Cloud Goods Sharing】The Road to IPO: How Enterprises Can Be Well-Prepared

In today's capital market, IPO (Initial Public Offering) is still an important way for companies to achieve rapid expansion and raise awareness. However, today's IPO market has changed dramatically from 20 years ago, when there was an influx of Internet companies. The explosive growth of the private capital markets and increasingly stringent regulations have made the process of preparing an IPO more complex and challenging. How do you stand out in this environment and achieve a successful IPO? This article will reveal five key steps for you.

I. The Current State and Challenges of IPOs

The number of IPOs has been on a downward trend since peaking in the late 1990s, but today's public companies are more stable and larger. At the same time, the private capital markets have exploded. This shift is closely linked to worldwide regulatory regulations, which have increased scrutiny of public and private companies to unprecedented levels. Preparing for an IPO is bound to be difficult as companies not only have to comply with regulations, but also have to meet the higher expectations of investors.

In China, going public through an IPO is a dream for many companies. Once a company goes public, it can attract a wide range of social capital, thereby rapidly expanding its scale, raising its profile and enhancing its competitiveness. However, the road to IPO is full of challenges. The IPO audit and continuous supervision after listing put forward higher requirements for enterprises in terms of information disclosure, financial compliance and internal control and governance.

2.Operational Challenges of Selecting IPO Companies

(i) Flexibility and Variety

IPO companies are equipped with excellent growth and innovation, and their organisational structure, resource management, and operational methods are flexible and variable, requiring an enterprise resource management system that can be flexibly adjusted in response to changes in business needs.

(ii) Regulate operations

Enterprises need to meet regulatory requirements in terms of asset integrity, personnel independence, organisational independence, financial independence, etc. In particular, the requirement for business independence requires clear and credible evidence to support disclosure and verification requirements. For enterprises with multiple branches, more scientific and compliant operation and accounting processes are required.

(iii) High-standard financial management

An IPO for the domestic capital market places higher demands on the overall view of the financial management team, the real-time nature of the financial accounting results, and professionalism. For IPO in overseas capital market, the biggest challenge is that the accounting standards are different from the domestic accounting system, the financial team should be able to deal with international financial management, be able to consolidate the global business, and be able to issue accounting and reporting reports in line with the requirements of the corresponding accounting standards.

(IV) Internal control system construction

Before the IPO, enterprises have usually started to work on the construction of internal control system by benchmarking the documents and requirements for the establishment of the corresponding internal control system. The difficulty lies in how the system based on internal control requirements can be implemented from internal control manuals, management methods and requirements, and supported by corresponding management tools. In addition, for risk early warning, enterprises either lack data support, or no risk warning, need to strengthen internal control.

3. Five Key Steps to a Successful IPO

(i) Upgrade the Finance Department

First, companies need to assess the strength of their finance team. For companies looking to achieve a successful IPO, their finance team will also need to have more specific skills. The CFO must consider how his or her role will change after a successful IPO, from being responsible for day-to-day management to being more responsible for leadership and strategic oversight, including monitoring risk and compliance issues and helping to drive technological innovation. Finance team members must be able to adapt to a fast-paced work environment, be well versed in systems and processes, and be willing to continue to learn, identifying and remediating their own gaps in data management, automation, and reporting.

(ii) Improving Systems, Processes and Controls

Automating financial processes has become critical as the finance department has come under increased pressure for accuracy and speed. Legacy systems simply did not meet control requirements or support access to the financial data needed to archive and meet ongoing compliance. One of the major advantages of automated, integrated financial processes is the ability to close the books quickly. For any company in the capital markets, it is critical that month-end closings are completed in a timely manner (typically no more than 7 days). Only by completing the closure in a timely manner can a proposed public company meet stringent reporting requirements and a private company provide timely statements to investors.

(iii) Establishment of a good corporate management system

One of the most basic and important acronyms in capital market operations is GRC, or Governance, Risk and Control. Without a rigorous management system, any measures to mitigate risk and ensure compliance are futile. Corporate boards play an important role in overseeing management's objectives, strategies and decisions. It is therefore important for board members to have a good understanding of their industry and the challenges faced by their management team, and to be able to offer reasonable and objective views and opinions.

(iv) Enhancing risk management capabilities

For any capitalised business, there are two risk parameters that must be considered. The first parameter is whether internal processes are compliant. The cost of compliance can be very high for small and medium-sized listed companies. The second risk parameter is whether public and private companies in the capital markets are sufficiently protected against the risk of cybersecurity incidents to ensure cybersecurity and data privacy. According to the 2017 Data Breach Loss Survey, jointly published by IBM and Ponemon, losses due to data breaches averaged $3.6 million globally, with losses averaging $14 per piece of stolen data.

(v) Building Strong Relationships and Enhancing Communication with Investors

One of the best investments for a capital-operating business is building strong investor relationships. Senior investor relations professionals have strong communication skills and can easily identify needs and put themselves in the shoes of shareholders, investors, public companies, and financial analysts. They have excellent communication skills and are well versed in legal and financial matters. Companies with IPO plans must look for an investor relations experts, so that their early involvement in the IPO process, to promote strategic communication.

4.Help companies IPO: Oracle NetSuite ERP cloud advantages

As a global leader in enterprise and SME financial management, Oracle NetSuite ERP cloud financial management system can be seamlessly integrated with all NetSuite order management, inventory management, CRM and e-commerce capabilities to help companies streamline key business processes. With a unified cloud-based platform architecture, the solution efficiently empowers Pre-IPO companies and those with private equity plans to gain real-time insights into financial performance, both at a holistic level and from an individual transaction perspective. It accelerates daily financial processing and closure of accounts, while ensuring compliance, etc., to fully meet financial management needs.

(i) Accelerate monthly close

Oracle NetSuite Financial Management Solution helps organisations to quickly process daily financial transactions, accelerate financial close and ensure compliance. And the solution uses a single cloud-based platform architecture, whether from a comprehensive level or individual transaction perspective, can provide comprehensive, real-time visibility into the financial performance of the enterprise.

(ii) Easily Ensure Compliance

Oracle NetSuite Advanced Revenue Management solution easily meets the compliance requirements of guidelines such as ASC 605 IFRS 15 and ASC 606 by automating revenue forecasting, allocation, recognition, reclassification, and auditing through a rules-based event processing framework. Whether an organisation sells products or services, or both, and whether the sale occurs at a single point in time or involves multiple distinct time periods, Oracle NetSuite Revenue Recognition solutions help you accurately plan for revenue, calculate revenue, and display revenue data on your financial statements.

(iii) All-in-one Planning, Budgeting and Forecasting Solution

Oracle NetSuite Planning and Budgeting Cloud Service (PBCS) provides a flexible and customisable deployment approach to support organisations in rapidly adopting the world's leading financial planning and budgeting solution across lines of business. As a scalable and collaborative solution, Oracle NetSuite PBCS integrates modelling capabilities, approval workflows and reporting to help develop both enterprise and departmental financial plans. In addition to this, the solution uses a powerful computational engine that can accommodate a wide range of business logic, quickly enable in-memory aggregation, instant financial planning analysis and report generation.

5. Customer Testimonials

Zhu Fang, Director of Information Department, Zhejiang Infinite Optoelectronics Co., Ltd: "Oracle NetSuite helps Infinite's overseas branches and subsidiaries to build a highly efficient and accurate information architecture, and to achieve unified standards for processes and data with the group, which helps us to have more sound internal control and management; in addition, the finance and tax of local enterprises in the European Union and North America are quite different from those of the domestic market. In addition, Oracle NetSuite's comprehensive and complete overseas financial and tax management capabilities help us quickly realise the integration of business and finance, thus making Infinity's financial management more compliant."

●Slip Xiang, Deputy Director of IT, Jianhe (China) Co., Ltd: "Based on Oracle NetSuite system, Jianhe Group has realised the integrated application of sales, purchasing, inventory, and finance, which has comprehensively improved the operational efficiency; moreover, in terms of financial compliance, NetSuite has set up a standardised business process from the group's viewpoint, which can meet the requirements of global and unified control of Jianhe Group. globalised and unified control requirements; in particular, it realises the integration of business and finance in the Indian branch and enhances the transparency of information disclosure."

6.Conclusion

The road to IPO is full of challenges, but through scientific preparation and reasonable planning, enterprises can successfully achieve their listing goals. Upgrading the finance department, improving systems and processes, establishing a good company management system, improving risk management capabilities and establishing a strong relationship with investors are the key steps to a successful IPO.Oracle NetSuite ERP cloud financial management system, with its powerful functionality and flexible architecture, provides a solid backing for enterprises to help them shine in the capital market. The cloud financial management system provides a solid support for enterprises with its powerful functions and flexible architecture, helping them to shine in the capital market stage.