SaaS

Article Dean Dorton

Happy New Year! 2019 is here, a time for new opportunities and potential for growth. The subscription economy, a newer business model that focuses on the customer relationship rather than products or services, is definitely growing. According to researchers, the subscription e-commerce market has increased by more than 100% a year over the past five years.

You can get just about anything you want on a subscription basis—streaming video, meal prep in a box, software, and even designer gowns. Tien Tzuo, CEO of Zuora, notes the wide range of payment choices that subscription companies are allowing their customers: pay-as-they-go, pay-per-subscription monthly, or via a long-term contract. “The point is to have flexibility,” he says.

He adds, “The Subscription Economy has increased the intimacy between SaaS companies…and their customers. In the Subscription Economy, every company must better manage a direct, complex, responsive, multi-channel relationship with its customers…. The shift to the Subscription Economy brings with it the need for a completely different approach to building your business.”

Just send me the bill—my way

In the subscription economy, billing is much more complex. Instead of the order-centric model, subscription billing is adapted—within reason—to the needs and preferences of your customers. As your business grows, the complexities will only multiply. Add in the new revenue recognition guidelines (ASC 606/IFRS 15), and the need to automate your billing processes becomes all too clear.

Order-centric financial solutions don’t scale in the subscription economy, where customer relationships reign supreme. Limitations include:

  • A fragmented customer lifecycle across separate orders for upsells, down-sells, and renewals
  • Lack of ASC 606 tracking for performance obligations over the customer’s lifetime
  • Complex tracking and forecasting of revenue streams, including the inability to see billed, unbilled, and paid billing across both recognized and deferred revenue
  • Lack of separate schedules for billing and revenue

Whitepaper: How Automating Your Billing Lets You Scale with the New Subscription Economy in 2019

As a result, you’re stuck using error-prone spreadsheets that don’t allow you to scale.automating subscription billingTo address the diverse needs of your customers and support growth, you need a contract-based financial solution that provides a single system of record to automate billing, revenue recognition, forecasting, and SaaS metrics. You save time calculating, reconciling, and aggregating data, resulting in faster quote-to-cash cycles and faster period closes.

In our whitepaper, “Finance’s Guide to Automating Your Subscription Business,” financial management experts at Sage Intacct offer 5 key steps to ensure predictable revenue:

  1. Integrate systems for quote-to-cash
  2. Establish contract based billing
  3. Build end-to-end revenue management
  4. Create real-time SaaS and GAAP dashboards
  5. Forecast the future

Learn how to scale your billing through automation, so you can grow your business with confidence in the new year and beyond. 

download the free copy of the whitepaper here

Article Dean Dorton

SaaS companies, especially during times of rapid growth, can quickly lose control of their financials when they can’t see a solid performance picture from patched together reports and disconnected static financial systems.

They do see mountains of spreadsheet workarounds, aging data, slow reporting, and lack of clarity on subscription model performance. However, that only draws away from time, resources and clear decision-making. Growing SaaS companies need access to the best benchmarking tools available and fast visibility into their key metrics. Beyond GAAP, SaaS business are free to build stronger growth strategies, shed a brighter light on forecasting, and stay on top of growth.

No matter what stage of growth your SaaS company is in, the tools are out there to quickly see into your key metrics in a much easier and cost-effective way. Metrics like churn, customer lifetime value, customer acquisition costs, committed monthly recurring revenue, and various schedules of recurring revenue, – monthly or annually- all need frequent examination.  

When your teams can quickly analyze these sections of data in real-time, your company gains optimal leverage of your place in the market and quickly achieves company goals.

Sage Intacct, a best-in-class cloud-based financial management solution, offers the most important metrics to SaaS companies, updated all in one place, 24/7/365. But more important than real-time access is organized visibility. From Sage Intacct’s Digital Board Book, you can see all of your metrics based on your company or project’s unique needs, and none of the ones you don’t.  You can see as much or as little as you like, with the capability to drill down to the transaction.

The Digital Board Book is completely customizable, with data showcased the way you want to see it. Data conveniently displays in charts, graphs and lists, to get the numbers you need, as fast as possible, fully automated.

Because Sage Intacct integrates with Salesforce, you have access to the most current operational data from your dashboard as well. Whether your company is moving through the Super Early Stage of business or approaching IPO, you can detail your Digital Board Book for what you need now, while feeling confident that you can adjust your metrics to fit your growth.

For better control of your financials, contact us. We want to help you find a solution that will shed light on your most important metrics that will scale with your business.

E-Book: Managing SaaS Metrics Throughout the Company Growth Lifecycle

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managing saas metrics through the company growth lifecycle

Article Dean Dorton

When your SaaS business is trying to stay on top of all that added work that comes with rapid growth, along with staying compliant with the new ASC 606 regulations, the right financial management software can make all the difference. If you’re still using an on-premises system, limited in its capabilities to handle your financials, you’ll want to read on.

Sage Intacct, a cloud-based financial management solution, offers automation, generous options, customizations, and the snapshot reporting that SaaS companies need, in all the right places. It delivers what SaaS businesses need most for complex revenue recognition, reallocation, billing, renewals and performance metrics.

Contract and Subscription Billing

Sage Intacct’s built-in usage-based and tiered pricing features within their billing module, is ideal for SaaS. Whether your billing is over regularly-timed periods or nonlinear, you control your billing options in the way that fits your unique business.

  • Sage Intacct has an automatic renewals feature that is designed to trigger contracts approaching their end dates, which means renewal processes require less manual labor and run more smoothly.
  • Automated billing schedule options can be set up to fit a wide range of unique contracts, whether billing happens monthly, yearly, or in a non-linear way with milestones.

Contract Revenue Management

Sage Intacct’s Contract Revenue Management module is the first to offer automated solutions to the ASC 606 and IFRS 15 guidelines. SaaS companies can experience faster, more accurate revenue recognition, even with the new revenue reallocation regulations:

  • Sage Intacct handles revenue reallocation automatically– even for closed periods, so compliance is faster, easier and more accurate.
  • View revenue details right in the contract, with side-by-side comparisons of revenues and expenses under the old and new guidelines for at-a-glance comparisons.

Reporting and Dashboards

Because SaaS growth happens fast, growth strategy needs to happen even faster. Sage Intacct’s reporting features are designed for stakeholders and decision-makers who need to see current numbers, in a readily accessible way:

  • Stakeholders and decision-makers see real-time accurate views into profitability and performance with customized reporting options on-screen and in print.
  • Get cloud-accurate KPIs for SaaS metrics on Sage Intacct’s Digital Board Book, like churn, customer lifetime values, annual or monthly recurring revenue, and customer acquisition costs – all the metrics you need, when you need them.

Whether you’re just noticing your financials becoming harder to manage lately, or you’ve been thinking about making the move to the cloud as a logical next step in your growth, contact us.

Why are SaaS companies moving off legacy systems?

view our on-demand webinar

Article Dean Dorton

“I’m a very loyal customer for good products and good people, and that’s exactly what I get from both Massey and Sage Intacct- good products and good people”.

Massey Consulting’s goal is to build close relationships with our customers, and stick with them as they grow, to see their company succeed every step of the way. That means we need to offer products that are a great solution for our customers now, and as much as in the future.

Hear from Ellen Grantham, the CFO at K4Connect and a current Massey Consulting and Sage Intacct client, on how these two companies work together as a powerful combination to make your business scale.

K4Connect is an Internet of Things company, offering software solutions that serve and empower older adults and individuals living with disabilities, enhancing their lives by integrating the latest in smart technologies into a single responsive system.

Article Dean Dorton

Complex by nature, subscription-based businesses have a lot on their plates when it comes to revenue recognition. For them, complicated customer contracts paired with the new ASC 606 and IFRS 15 guidelines pile on mountains of work and create legendary reallocation headaches for SaaS companies everywhere.

This is because SaaS businesses have more complicated revenue recognition requirements to follow, not just for new contracts, but for existing ones as well. For subscription-based businesses, add-on’s, renewals, and complex subscription modifications, pauses, and cancellations, all add into the revenue recognition scope.

This means a lot more work to track varying revenues in order for financial teams to keep the company compliant, and a lot more work as a result of all the new subscriptions coming in.

Subscription-based businesses need a best-in-class financial management solution like Sage Intacct, that takes compliance seriously, to offer strong revenue recognition support for SaaS companies, to help them meet the ever-changing accounting compliance guidelines.

Sage Intacct speeds, automates and simplifies compliance in four ways:

1) Sage Intacct’s ASC 606 and IFRS 15 compliance built into the software. This helps SaaS companies manage their contracts, and control deferred revenue transactions more effectively in order to adhere to new recognition, reallocation, and expense amortization changes.

2) Customizable dashboards with real-time visibility offer deep, drill-down options showcasing SaaS metrics to see revenue transactions, and data related to changing subscriptions and renewals to calculate the impact they have on reporting.

3) Deep automation and product options mean Sage Intacct picks up where spreadsheets leave off. All in one place, SaaS teams can speed month-end closings, simplify reallocations, track subscriptions and make changes, simplify and streamline the auditing process, and strengthen compliance to adhere to the new guidelines more easily.

4) Sage Intacct uses VSOE and full FAS 52 support so SaaS companies can stay current with ever-changing accounting rules. This means Sage Intacct users always have the most up-to-date accounting guidelines at work in the software solutions, so they can feel confident in their financial compliance.

When you consider the volume of SaaS industry challenges and then add in rapid growth, it can almost feel like too much to handle.  A financial management tool with the right kind of options, however, can support SaaS teams, and ease the pains of subscription complexities.

Put the aspirin away and contact us instead. We want to help you find the best management solution to free you so you can focus on your customers and your growth.

In the Meantime

If you’re a SaaS company and aren’t aware of the risks that come with not complying with the new ASC 606 guidelines, check out our free eBook.

why compliance can’t wait

Article Dean Dorton

Will Your Organization Be Ready For The Deadlines? 

With 2017 almost behind us, a sense of anticipation pervades the air. All eyes are on the IASB (International Accounting Standards Board) and FASB (Financial Accounting Standards Board), the two regulatory organizations premiering new standards for contract revenue reporting in 2018 and 2019. The formidable ASC 606 and IFRS 15 regulations are fast becoming the nemesis of C-level executives and finance departments everywhere.

Private companies that report under GAAP (Generally Accepted Accounting Principles) need to adopt the new rules after December 15, 2018. So, if your reporting period begins on January 1, 2019, your company will need to show compliance by 1/1/2019. Public entities that report under GAAP need to be in compliance after December 15, 2017. If your reporting period starts in January, your company will need to be compliant by 1/1/2018.

Entities that report under IFRS must comply with the new revenue reporting standards on or after January 1, 2018.

It is worthy of note, however, that CFOs and CIOs demonstrate a significant difference of opinion regarding their industry’s compliance progress. According to Ernst & Young’s Revenue Recognition Survey, 85% of CIOs feel confident that the IT team is successfully facilitating the shift to the new standards. However, only 60% of CFOs share the same confidence in their IT teams’ ability to lead the transition successfully.

In the same survey, 71% of CFOs report that their companies have yet to implement the ASC 606 or IFRS 15 standards. Another 34% of CFOs report that their organizations are at risk of missing the deadline for compliance altogether. The consequences of non-compliance, however, may prove costly in terms of reduced stakeholder and shareholder confidence.

Based on the new standards, investors will be privy to revenue backlog disclosures, a metric that provides further clarification regarding a company’s business operations. By extrapolation, investor reliance on revenue backlog metrics as an ROI gauge will likely increase, especially for SaaS-based businesses. So, compliance is imperative, sooner rather than later.

Why The FASB & IASB Created The New Rules.

Because the GAAP standard allows different industries to follow their own procedures in complying with reporting regulations, there is a wide discrepancy in accounting measures used for similar economic transactions.
So, the FASB and IASB created the new ASC 606 and IFRS 15 standards to:

  • provide a more substantive framework to address complex revenue issues. provide improved disclosure requirements to users of financial statements.
  • reduce the number of regulations companies must comply with during the financial reporting process.
  • remove inaccuracies and flaws in the existing revenue reporting framework.
  • reform and standardize revenue recognition practices across industries.

Which Industries Will The ASC 606 and IFRS 15 Impact?

The ASC 606 and IFRS 15 establishes a five-step process to govern the revenue recognition process. Meanwhile, the AICPA (American Institute of Certified Public Accountants) has formed 16 industry task forces to address how these different industries can comply with the new standards. Each of the task forces highlights implementation issues related to the compliance process and dedicates a period to informal commenting regarding those issues.

Industries represented on the task forces include those that will be impacted by the new standards, especially the airline, healthcare, software, finance, insurance, construction, and utility industries. The best way to comply with the new standards is to deploy a contract management system that, among other things, provides for dual reporting to highlight the new standards’ impact on a business, automatic reallocation of revenue and expenses to match contract changes, and dual treatment capabilities in applying the standards to each transaction.

How Sage Intacct Can Facilitate The Compliance Process.

Sage Intacct is the premier contract management system that will make compliance a reality, not an existential nightmare. Its Cloud ERP solution can handle the requirements of subscription-based operations and comply with new revenue recognition and expense amortization requirements.

Sage Intacct’s comprehensive automated system spares you the challenges associated with spreadsheets. You won’t need to make manual adjustments or navigate complex business reports. The Intacct SaaS dashboard shows key business metrics such as customer churn, revenue churn, and customer acquisition costs. Intacct effectively puts control of the compliance process back into the hands of CFOs.

If you are interested in how Sage Intacct can make the transition to the new standards error-free and timely, contact us at Massey Consulting. We will answer your questions and provide the definitive solutions you seek.

In the Meantime, Download our Free eBook

Discover more ways to scale your business by checking out “5 Essential Financial Management Practices of Biotech Companies Poised for Growth”

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