Companies large and small have learned the hard way that Excel won’t cut it for their accounting needs. Case in point, Chase’s $2 billion loss due in large part to errors in manual Excel spreadsheets.
SaaS companies, in particular, have accounting and budgeting needs that generic accounting software struggles to support. For instance, tracking Monthly Recurring Revenue is essential to many subscription-model SaaS companies. It’s also incredibly difficult to calculate manually in a tool like Excel.
Other Features that would be crucial for SaaS companies include:
- Prebuilt MRR reporting
- Subscription billing/invoicing
- Cash flow forecasting
- Payment integrations
- CRM integrations
- Uncapped transactions volume
- Cloud-based software
Some of these features are fairly easy to get across all enterprise-level tools in today’s software market. Others are harder to come by– which is why we’ve identified only 3 top accounting tools and an additional list of point solutions that can help SaaS firms meet their accounting and budgeting needs.
The Best Accounting Software for SaaS Companies
The following products are highlighted because they offer SaaS-tailored tools and rank highly on the Accounting Software TrustMap—a dynamic grid that measures TRScore and the interest of B2B buyers. They are ordered according to the number of ratings and reviews they’ve earned on TrustRadius.
Sage Intacct is a cloud-based software that openly claims to provide features tailored for the SaaS business model. The relevant feature list includes native subscription billing and recurring revenue visibility. Intacct also offers add-on integrations with your CRM.
Intacct users report that its contract management and revenue recognition capabilities are excellent, but require some upfront investment to set up properly. Once revenue recognition is implemented, most or all of the routine processes are automated, making revenue recognition far less taxing on your time and resources. Intacct’s integrations with CRMs, especially Salesforce, is a frequent pro for businesses as well.
Users do complain about the extra cost associated with various add-on capabilities and integrations, such as budgeting features. The training materials are also lacking, which can add to new users’ learning curves during implementation.
“Sage Intacct is great for Saas companies. Invoicing is easy. Multi entity set up is intuitive. Its customization is easy to understand. There are many different ways to achieve one objective with Intacct.”Verified User | Employee in Information Technology | E-Learning Compan | 501-1000 employees
FreshBooks also provides the necessary foundations for SaaS accounting. It features native recurring payments and invoicing, as well as monthly income and expense tracking, all on an online platform. It is an excellent transition software from spreadsheet-based bookkeeping to a more comprehensive and easy-to-use system.
Given its origins as an invoicing tool, it should come as no surprise that invoicing is among FreshBook’s most frequently praised features. FreshBooks excels particularly if your SaaS model entails dealing with high volumes of recurring invoices.
Some of the peripheral accounting features, such as reporting, are rated relatively low. This may be attributed to the newness of some of these extended features on the platform, but you should check to make sure that FreshBooks can easily provide the exact kinds of reports and visibility most relevant to your business before purchasing the software.
“For a small business where you want to add to link your business bank account, track expenses, log hours on projects and invoice customers without any hassle, this is the platform to use. Easy to set up, customize and you can send invoices via email and get paid electronically.”Lou G. | Owner | gol10dr LLC | Information Technology and Services | 1-10 employees
How to layer the functions you need on the software you want
While some accounting products that centralize all of your SaaS needs into one product, the far more common approach among SaaS companies is to stack point solutions on top of less-tailored accounting software. The point solutions can target everything from recurring invoicing to MRR tracking to online payment processing. Some accounting software will provide a mix of native SaaS company functions and integrations with third-party best of breed tools, including:
- QuickBooks: Quickbooks dominates the small business accounting space, and offers at least some features for virtually every industry. For SaaS companies, its Recurring Transactions function can automate many of the subscription model processes. However, you’ll need to look to third-party integrations for MRR calculating and reporting functions. Quickbooks Online will likely be the most versatile option that the vendor offers.
- Xero: Xero is frequently recommended for SaaS companies due to its 3rd party integration marketplace, which is head-and-shoulders above its competitors. That, and its cloud-based structure, makes it ideal for small and growing SaaS businesses.
- Wave: Wave specializes in accounting software for very small businesses. For the very small SaaS businesses, Wave does offer native recurring billing, leaving you to find the MRR reporting plugin that best fits your business.
There is a large and growing marketplace of third-party providers for specialized SaaS accounting and reporting functions. Some of the most frequently discussed include:
- SaaSOptics: This product provides most or all of the extra functionality that a SaaS company needs on top of general accounting features. It provides excellent visibility into MRR, as well as subscription management and invoicing.
- Chargify: This plugin integrates with your main accounting platform to provide subscription management, revenue recognition, and extensive security for online payment processing.
- Stripe: Stripe is a leader in online payment processing for B2B companies. It charges a percentage plus a flat fee per transaction, so its cost-effectiveness may vary by volume of transactions.
How to decide between full accounting software vs. add-on solutions
Given the emphasis most accounting platforms have on integration, your best option will likely be finding an accounting software you like that also integrates with the specific third-party plugins you need. Most third-party tools integrate with the most popular accounting platforms, but the quality and price of any given integration can vary.
However, you should also expect the large accounting software providers to fill out their offerings for SaaS companies in the future with more tailored features and reporting. If you want to future-proof your accounting software, ask vendors what specific features are on their roadmaps, and whether their focus is on integrating third-party tools or developing those functions natively.
If you’re not sure which specific software combinations would be best for you, find out what other SaaS companies your size have used, and what their experiences have been like. TrustRadius allows you to filter accounting software reviews by company size or industry, allowing you to get these “apples to apples” insights. Experiences from users like you can help make sure your accounting software helps save you money, instead of costing you!