In many ways, operating a SaaS business globally can be easier than running one with a traditional business model. However, in other ways, it presents new considerations and challenges to overcome. For example, one-time payments only need a foreign exchange calculation at the time of purchase. With a recurring revenue business model, you must account for foreign exchange fluctuations at each invoice and payment, whether you bill monthly, quarterly or annually.
Despite challenges like this, more and more SaaS businesses are taking the leap. A recent report by Forrester Research found that the public cloud market is on pace to be $236 billion by 2020. If you’re ready to take your share and are considering expansion, it’s likely that you’ve heard that accounting with multiple currencies can be challenging. To successfully manage financial operations in multiple markets and with multiple currencies, you have to automate your financial operations because:
- Currencies fluctuate – using an exchange rate to translate between different currencies may seem easy, but you have to consider how exchange rates fluctuate over the contract term and how that will impact your books. Multi-currency transactions can come with foreign exchange gains or losses that you’ll need to account for if you want to ensure your financial operations are accurate. To make smart business decisions and grow, you’ll need real-time visibility into exchange rate fluctuations and their impact on your contract value over the term.
- Multiple currencies and manual processes are like oil and vinegar – if you are working with multiple currencies, you’ll need a way to automate and consolidate financial metrics into one currency. This presents a big challenge for SaaS businesses that are still managing their financial operations manually in spreadsheets. Not to mention, with multiple currencies, you’ll have no single source of truth. An error in one spreadsheet, like an unaccounted for foreign exchange rate change, means your books are off balance. Before you know it, reports don’t match up and it is difficult, if not impossible, to get a real-time picture of the health of your business. To avoid this, it is critical that you consolidate multi-currency reporting in your home currency.
If you are facing the challenges of multi-currency accounting and the impact it has on reporting, metrics and analytics, we can help. Global expansion should be exciting. We’ve created an affordable and easy way for SaaS businesses to not only manage the day-to-day financial operations of doing business globally, but also to have real-time visibility into analytics across 154 different currencies.