subscription-based accounting

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.

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Article Dean Dorton

Private companies that offer subscriptions and contracts might not have to account for properly allocated revenues and amortized expenses until next year, but to be compliant for next year, the planning starts now.

This is because any contracts starting up today that will be active in 2019 will also require ASC 606 compliance.

With so many allocation variables muddling the new compliance standards, knowing how to modify your processes can reduce errors, save your financial department undue headaches, and help your company avoid the risks associated with non-compliance, come 2019.

Companies that handle contracts and subscriptions expected to adhere to the ASC 606 compliance guidelines will need to modify their financial processes with these 5 steps to stay compliant:

1) Ensure contract and collectability threshold transparency – Multiple related contract agreements may require recognition as one contract, and contract collectability requires tracking, with revenue being recognized as it meets the collectability threshold. Companies need an accounting system designed for automated contract management to speed and simplify the new, in-depth tracking processes required for compliance.

2) Outline performance obligations for uniformity and clarity – Goods or services must be shown as distinct, or as distinct within a contract. An accounting system with contract management automation is critical to help identify, track, flag and break out performance obligations, to be allocated and recognized at the right time.

3) Identify variable pricing terms – Refunds, incentives, discounts, and flexible financing all impact revenue valuations under the new ASC 606 guidelines. Use consistent methods, and automation wherever possible to flag contracts with non-standard terms.

4) Allocate part of the transaction price to performance obligations –You must identify your performance obligation based on a relative standalone price. For companies that still use spreadsheets, allocating this pricing on a per-contract basis leaves a large margin for error and countless hours of manual work. Companies that must account represent performance obligations within contracts need an accounting system that takes manual spreadsheets out of the equation to avoid serious allocation errors

5) Properly recognize revenue – Under the new ASC 606 rules, revenue needs to be tracked and recognized as the good or service is consumed. Companies need automated systems that synchronize billing and revenue recognition to work in time, so as customers consume goods or services, the system is properly tracking and recognizing revenues and amortized expenses.

With so many changes coming, companies can’t rely on old, outdated systems without inviting the risks of task overwhelm, massive allocation errors, and hours of retracing steps through complicated contracts.

Sage Intacct, a best-in-class financial management solution is designed to be ASC 606 compliance-ready, with deep automation to detail out contracts, track revenues easily, break out expenses over time, and eliminate the need for error-prone spreadsheets.

Reach out to us for more information. Let’s help you find the right solution to prepare your business for what lies ahead.

Need More Information?

Discover the basic guidelines of ASC 606 compliance and try the next steps your company needs to take to prevent any risks.

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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

With technology changing the playing field for Accounting departments across the nation, companies today are looking for tech-savvy CFO. Someone who can see the value in cloud-based ERP systems, and seamless integrations with a best-in-class philosophy.

How do you become tech-savvy in 2017?

By embracing the promise and power of technology and keeping up with changing regulations to ensure compliance.

While the newest regulations (ASC 606) will not be active until 2018, the companies that will be successful are already talking to their CPA firm of choice on how to be compliant. We spoke with Cathy Patton, CPA, from Hughes Pittman & Gupton, LLP regarding what she has heard from her clients. She shares that many CFOs are already asking what they need to do now to be compliant so that when the regulations go into effect they will continue to flourish.

In order to stay compliant with the regulations, many companies need to move to a cloud-based ERP solution that has Revenue Recognition capabilities. Also, having access to dashboards that are updated in real-time allows for a quick and easy understanding of where the current finances are at any given time. With custom dashboards for key players in the company, the CFO can easily share information with the CEO, COO, Controller, Accounting team, and Managers of departments. Dashboards help individual department heads to see how they are performing against their budget as well as other key performance indicators.

A cloud-based system allows tech-savvy CFOs to have access to up-to-date data no matter their location. They can check expense reports, AP, dashboards, and create reports even while traveling.

Having a modernized system allows a CFO to keep up with competitors, and become an advisor to the company. There is not a single company that can afford to be left behind in the age of technology.