QuickBooks is an easy decision for a SaaS startup or SMB. However, subscription-based businesses quickly run into challenges. QuickBooks does many things well, but it doesn’t efficiently manage subscription revenue recognition or subscription billing, especially if you have sales-negotiated behavior in your contracts, which is the heart of financial operations for a SaaS business and is required by ASC 606 and GAAP compliance.
That’s why SaaS companies augment QuickBooks with spreadsheets. We’ve seen it all when it comes to revenue recognition spreadsheets — they’re complicated and error-prone.
Subscription-based businesses can’t fully recognize revenue from a contract until they’ve delivered the agreed-upon services. But with varying contract lengths, sometimes bundled services and the occasional non-standard service, SaaS businesses need the flexibility to recognize revenue in a manner consistent with their agreements. In B2B SaaS, this might mean a combination of amortizing revenue over the term or recognizing it based on completing certain contractual milestones.
This is further complicated by the inherent contract volatility in SaaS financial operations. Upgrades, downgrades, renewals, re-negotiations of renewals, upgrade-extensions, cancellations and early terminations are all fair game in B2B SaaS, and they all put pressure on your financial operations team as QuickBooks and spreadsheets are poorly suited to managing it all.
There’s lots to love about QuickBooks, but for SaaS businesses, revenue recognition isn’t intuitive or efficient, leading to workarounds in Excel and an increased chance of error.
This isn’t a rev rec challenge, but it IS a saas business challenge with Quickbooks that further pushes people into spreadsheets to compensate. QuickBooks provides basic general ledger functionality, but that alone is insufficient for a SaaS business. You must have both GAAP-Financials and SaaS metrics like churn (logo and dollar), MRR, ARR, CLV, and CAC. For example, there is no place on an income statement to see churn. You cannot run a SaaS business without knowing your churn. Nor is there a place on an income statement to see the composition of your revenues (new revenue, renewal revenue, etc.)
Because of these challenges within QuickBooks, workarounds with Excel are common, but there are four main disadvantages to using Excel:
These are two different things, and not everyone realizes it. QuickBooks is designed as a general ledger, not a platform for subscription billing and revenue recognition.
Due to the limitations of QuickBooks for revenue recognition, many B2B SaaS businesses will start looking at ERPs like Sage Intacct and NetSuite for their general ledgers. The price tag of an ERP is steep, but the move can make sense and be good for a mature SaaS company. We’ll cover that in an upcoming blog post (so stay tuned).
The truth is you don’t have to make the big jump as soon as you think. And you don’t have to live in spreadsheets. We’re devoted to helping SaaS subscription businesses like you break away from spreadsheets — without breaking the bank.
You get to keep QuickBooks along with your sanity. We get to go to work every day knowing we’re helping 400-plus B2B businesses grow from start-up to maturity with the subscription management and financial operations insights they need, VCs depend on and GAAP requires.
It’s a win-win-win scenario.
B2B SaaS companies rely on SaaSOptics at many stages. One such company is Schoology, a learning management system with almost $60 million in funding, 12 million users and QuickBooks as their general ledger.
Schoology’s QuickBooks integration with SaaSOptics makes life easier and gives them the metrics and reporting they need to grow.
“SaaSOptics pushes invoices to QuickBooks, and this meant invoices would always match bookings, which closed the loop on revenue recognition. As well, if a transaction for a two-year deal was closed and payments needed to be split into 24 monthly increments, we could automatically establish these at the time of booking. The SaaSOptics integration ensured invoices were pushed out of QuickBooks in a timely manner and without relying on manual steps—we could set it up and rely on it to just happen. Then, I could easily report on it.”
- Amar Shrivastava, Schoology VP of Finance and Administration
SaaSOptics is a complete B2B subscription management platform that provides subscription and order management, GAAP revenue recognition, e-invoicing and payments, financial reporting and robust subscription metrics and analytics. SaaSOptics is a cloud-based solution that enables emerging and growth subscription businesses the ability to eliminate their dependency on spreadsheets and streamline their financial operations, reporting and performance metrics.
Unlike most subscription management providers, SaaSOptics is easy to use, very affordable and takes 2-4 weeks to implement. SaaSOptics serves over 450 customers worldwide managing over $3.3B in revenue.
SaaSOptics industry-leading performance metrics and analytics deliver all the subscription reporting you need such as ARR/MRR waterfalls, churn and retention rates, customer lifetime value (CLV), and a variety of cohorts. SaaSOptics provides deep integration with Salesforce, QuickBooks, Stripe, and Recurly, providing our customers with the efficiency, accuracy, and insight they need to manage and grow their business.