How Pilot Made Passage AI’s Acquisition More Seamless

Meet Ravi N. Raj, Passage AI’s CEO and Co-founder

Ravi N. Raj knows a thing or two about building and selling successful companies.

As the VP & GM at Kosmix, he led the company through an acquisition by Walmart. He then served as the Vice President of Walmart Labs—the retail giant’s innovation studio—building dozens of products from the ground up and acquiring over several to accelerate the lab’s growth.

And in 2020, Ravi successfully sold his own company to ServiceNow.

Meet Passage AI, now part of ServiceNow

Passage AI’s growth has been wildly impressive since it started in 2016. In just two years they were serving some of the world’s leading enterprise brands, like MasterCard, Shell, and Ford Motors.

Today they are part of Service Now, where they build conversational AI, or chatbots, that help companies deliver great customer service while automating repetitive tasks and answers to frequently asked questions.

Yet, what’s one thing this AI company didn’t automate?

Their books.

Busy founders don’t have time to do bookkeeping

Yes, there’s just a touch of irony that AI enthusiasts like Ravi and his co-founder tracked their own books by hand. They knew they would eventually get a professional bookkeeper, so a spreadsheet helped them keep records in the interim.

But a few challenges emerged for the rapidly growing company—especially since Passage AI quickly acquired paying customers. For one, manually trying to do bookkeeping for complex SaaS financials proved difficult. As Ravi shares,

“We didn’t know the proper accounting methodologies, like recognizing revenue for a SaaS company. When companies pay upfront for a two-year monthly contract, for instance, you have to recognize that revenue over two years. We’re not bookkeeping experts, so we didn’t do that correctly until working with Pilot.”

Tracking their books also took a lot of time, which they simply didn’t have. So, after raising a Series A, Ravi knew it was time to bring in the experts.

They surveyed the market and Pilot rose to the top for two main reasons: Startup expertise and competitive pricing. According to Ravi,

Pilot is a SaaS company and they work with many startups who are as well. We had confidence they’d understand our business.

Building accurate books and SaaS financial tracking—from day one

Pilot’s software and expert service makes migrating historical books easier than most services. In Passage AI’s case, Pilot cleaned and rebuilt their books from the start of the company’s formation.

Here’s how Pilot got Passage AI’s books up and running:

1. Learned about Passage AI’s business: Pilot starts by getting personal. As Ravi shares, “Our financial advisor asked a bunch of questions to understand our company, business model, cost structure, and existing expenses in order to build the books correctly.”
2. Cleaned the books from day one: Next up, Pilot combed through every transaction, from expenses to invoices. After integrating with Passage AI’s key financial accounts, Pilot reconciled each one from the start of the business.
3. Put the right financial tracking in place: Pilot then built the right bookkeeping systems to appropriately recognize Passage AI’s revenue. “Pilot helped us recognize our SaaS revenue and accrue our expenses the right way,” shares Ravi.
4. Sent monthly statements, on the dot: Pilot’s reporting works like clockwork. Monthly statements are sent the same day each month, ensuring Passage AI’s books are constantly up-to-date.

Thanks to Pilot we have professionally-maintained books for every month the company existed until the acquisition.

Accurate books saves time—and money—at every stage of growth

Maintaining airtight books and reporting accurate SaaS financials enabled Ravi and his co-founder to focus on what mattered most: growing a successful business. As Ravi shares: “Not having to worry about bookkeeping has saved me and my cofounder a lot of time.”

Pilot also saved Passage AI money by flagging unpaid customer invoices. With Pilot, companies get books with unmatched accuracy: In fact, Pilot checks each month’s books three times through a combination of proprietary software and expert reviewers.

“There were times when our customers didn’t pay on time or we forgot to invoice them. Pilot would flag it each time, which allowed us to quickly address customers and be more proactive about payments.”

With Pilot’s help, Passage AI was able to maintain timely payments and keep a positive cashflow.

Better books and accurate SaaS revenue recognition made it easier to track growth and set targets. Updating stakeholders also became much simpler.

To give our board and investors quarterly updates, I just forward what Pilot sends me. It saves a lot of time and there’s never any back-and-forth with investors.

Who knew due diligence could be such a breeze?

Due diligence isn’t supposed to be easy. There’s usually nothing more frightening than a third party looking under the hood to scrutinize every tiny detail, decision, and transaction.

Having overseen many acquisitions, Ravi has seen the worst: “When I acquired small companies at Walmart, their books were a mess. But having our books be really clean made the process really easy. Plus, Pilot stepped up with M&A support. They even participated on calls to explain how financials were recognized and accrued.”

Ravi happily recommends Pilot’s “affordable, efficient bookkeeping” to startups

Pilot recognized the need to make it seamless for founders. You can’t have long meetings to close every month’s books. It’s all by email, which saves a ton of time. It’s just affordable, efficient bookkeeping.