SaaS

Article Dean Dorton

SaaS companies are unique in their complexities.

In every stage of its growth, your SaaS company metrics focus should evolve to support success.  That means your financial system must come with some pretty fast footwork if it’s going to offer the flexibility and depth required to scale with your business for the long haul.

Companies just starting up are busy getting the word out about their business. They are pounding the internet pavement to get the subscriptions they need to build momentum. These companies need complex metrics relating to CRM, conversion rates, key leads, and website visits. They feel the squeeze between payroll, expenses, and A/P and A/R to keep customer relationships tight, and the business strong.

For early-stage SaaS with a solid subscription base, things start to get more complex as they keep a close eye on customer acquisition costs as well as monthly and recurring revenues. They gain their footing with new business and start hustling down the field, only to feel customer churn nipping at their heels.

SaaS businesses in the rapid growth stage have their roots and need to keep up with success while adjusting to their fast-growing size. As they start to build add-on’s and subscription modification options, they need to track their upsell, cross-sell efficacy, revenue recognition, and customer lifetime values, to name a few.

Finally, the SaaS public companies out there coming up on the end zone have to focus on metrics with even more complexity. These companies are looking at compliance on a massive scale, sales and quota forecasting, greater depth into market analysis, and in customer and revenue growth in year over year, and month over month break-outs.

With such a wide range of metrics that morph and fluctuate in priority through the many stages of industry-specific growth, SaaS companies need a system that can handle these changes quickly and effectively.

These companies need a flexible, yet powerful cloud-based financial management system like Sage Intacct. With Intacct, SaaS companies can get fast answers, and relief in smoother processes:

  • Deep, yet customized broad-scale automation to handle A/P, A/R transactions, consolidations, month-end closings and much more, no matter how big or small the business.
  • Flawless compliance with ASC 606 and IFRS 15 regulations specific to SaaS companies.
  • Real-time, customizable dashboards breaking out only the metrics decision-makers and stakeholders need to quickly build strategies and grow the business.
  • Lock-tight security and seamless integration with other best-in-class solutions that SaaS companies need to keep business moving along at a steady clip.

Whether your growing SaaS company is raring to go at the 50-yard line or coming up fast on the end zone, you can reach your 2018 goals with Sage Intacct’s SaaS business-ready solutions.

Download our FREE whitepaper: 7 Reasons to Move to Cloud Financials Now

Article Dean Dorton

Time is running out! The deadlines for private companies to comply with new FASB accounting and reporting standards is less than a year away.

For the first time in several decades, the organizations that establish accounting and reporting standards for public and private companies – the Financial Accounting Standards Board (FASB) in the USA and the International Accounting Standards Board (IASB) – have announced new guidance for contract revenue recognition – ASC 606 and IFRS 15.

To comply, affected companies will need to review contracts and possibly restate timing of their revenue. It may be necessary to modify computer systems and change procedures in areas such as sales, accounting, financial reporting and internal audit.

What is ASC 606 and IFRS 15?

The Accounting Standards Codification (ASC) 606 issued by FASB and the International Financial Reporting Standards (IFRS) 15 issued by IASB are both titled Revenue from Contracts with Customers and reflect the organizations’ agreement on best practices for contract revenue recognition across industries.

What is changing?

The new standards define Contracts with Customers as transferring goods, services or non-financial assets unless the contracts are already covered by other standards such as leases or insurance contracts. The change establishes a 5-step process for revenue recognition:

  1. Identify contracts signed with customers.
  2. Identify timing of separate performance obligations in each of those contracts.
  3. Determine the transaction price for the contract.
  4. Allocate the transaction price to each of the performance obligations.
  5. Plan for and recognize revenue as performance obligations are satisfied.

A major implication of the new process is that instead of recognizing revenue when the cash is received, companies will recognize revenue when performance obligations – formerly referred to as deliverables – are met.

Who is affected and how?

Companies who frequently change the terms of a customer contract will be most affected. Each time a customer contract changes, the new standards require companies to reassess the performance obligations and if necessary, reallocate revenue across the contract and defer expense recognition to align with the contract’s new delivery schedule.

So, it should be obvious that companies relying on Excel spreadsheets to prepare financial statements will see their workload significantly increased with the change. Additionally, accountants will have to keep two sets of books for a number of years to show and compare revenue recognition under old and new regulations.  

Take a look at this video for details on how easy Intacct makes ASC 606 and IFRS 15 compliance