Warning signs your SaaS company is outgrowing quickbooks: painful audits and challenging forecasts

For many startups and businesses that are still in the very early stages of growth, spreadsheet-based accounting solutions can be a real asset. But past a certain stage of corporate development, QuickBooks just doesn’t make sense, particularly for auditing and accounting forecasting. 

The more established your operation becomes, the more you stand to lose by relying on manual approaches. To give just a few examples of the “hidden costs” of spreadsheet accounting: 

• Severely constricted time horizons: SaaS CFOs need to confidently make projections over extended periods. The full impacts of pricing changes, new trends in your KPIs, and similar activities are often not apparent immediately. Just because you can manually forecast a short way into the future doesn’t mean you have a long-term, crystal-clear view. 
• Costly manual errors: Entrusting the daily operations of your accounting department to manual processes leaves you vulnerable to human error. When your team is frantically working overtime to get the books closed at the end of the month, or manually sending an important invoice, realize that you’re only one minor slip away from a potential mistake. 
• Limited audit accounting functionality: From the compliance point of view, manual processes pose a large risk. Automated accounting audits can reverse this situation.
• A disconnect from your KPIs: One of the most significant issues with spreadsheet accounting is that it egregiously limits your understanding of your SaaS metrics. Automated financial dashboards give you incredible detail into your KPIs’ present and future performance and how the former influences and leads to the latter. 

If you’re still with us, maybe you’re reconsidering your reliance on manual accounting methods. That’s a smart move. 

What makes accurate forecasting so vital?

If your accounting department is unable to execute accurate long-range forecasts, then one of its most critical functions is being left unexecuted. Or, at the very least, critically underutilized. 

The unfortunate thing about that is it’s not just an aesthetic mistake: it’s not a “keeping up with the Joneses” equivalent for SaaS companies. It results in real money being lost, real customers and contracts being lost, regrettable and ineffectual hiring moves, and much else that’s better off avoided.

• Avoid costly hiring mistakes: When making tough hiring decisions, you need all the financial information you can access. Automated cloud-based forecasting allows you to run detailed hiring scenarios and make multi-factor projections. Poor hiring burns through cash, harms team morale, and holds you back on your strategic goals. 
• Understand customer behavior in depth: From customer (logo) churn rates to upgrade and downgrade MRR and other SaaS metrics, it’s essential to realize these aren’t just numbers. They’re reflections of actual decisions your buyers and prospects make in the real world. Metrics offer a real-time glimpse into your customers’ behavior. And the more deeply you understand that, the more you can sway their buying decisions in your favor.
• Thrive in any market conditions: It’s no secret that we’ve entered a recession, and not even the SaaS market is immune. Companies that leverage cloud-based SaaS accounting are more agile because of automation’s incredible speed and accuracy. With manual and spreadsheet methods, accounting teams could struggle for days or weeks over complex manual projections that automation could arrive at virtually instantly. While manually-operated companies are still struggling with recession projections and plans, many automated teams are already back to business as usual.

• Build a connected financial ecosystem: Centralized and automated accounting helps you observe and utilize the hidden connections abounding in your business. Your various departments, SaaS metrics, campaigns and rollouts, forecasts, and more all influence each other subtly. Automation supports an integrated and interconnected internal environment for SaaS companies, so you can actively watch every element of your business work smoothly together.

Especially now that times have gotten tough in the broader markets, robust and accurate forecasting will distinguish between SaaS companies that thrive or financially falter.

Truly effortless forecasting 

Automation is one of the best ways to ensure accurate forecasting over long periods for complicated scenarios. Compared to manual forecasting, it’s unparalleled in the clarity it can give accounting teams:

• Consolidated views: Many accounting departments rely on spreadsheet accounting, which spreads their information into different files and folders. This colossal time sink routes valuable resources away from key profit-driving activities. Sage offers visual data consolidation with streamlined financial dashboards. Your team leaders have all the data they need on a single screen. No spreadsheets are required.  

• Scale your pricing strategies easily: When planning new pricing models, automation lets you forecast at scale and far into the future. This is important because pricing alterations don’t always behave long-term the same way they behave in the context of short-term, small-scale projections and forecasts. Speaking of scaling, automation also ensures that your accounting abilities scale with your broader business to avoid bottlenecks.
• Monitor churn and other KPIs in depth: Cloud-based accounting connects you to your metrics in real-time, so you can better observe, influence, and improve them going forward. SaaS CFOs are directly responsible for optimizing their company’s financial metrics, and spreadsheets are no longer the best way to accomplish this.

Yet the benefits of the cloud for finance leaders don’t end there. Let’s take a quick look at auditing in accounting.

Automated audits: embrace the future 

Automated auditing has become essential in today’s complex accounting environment. While no one necessarily looks forward to an audit, automating the accounting process will make it relatively painless. Specifically, you’ll be able to: 

• Always know why: Sometimes, it’s not sufficient to document the purely technical elements of a transaction, and auditors request to know what motivated the change. Sage allows you to permanently record and store why something was done in addition to what was done.
• Access continuous audit trails: An important warning sign that it might be time to upgrade your accounting solution is when audits get painful and confusing. When did a transaction change, and what did it change to? Being able to confidently chart transactions is a big component of remaining GAAP compliant. 
• Use drillable financial dashboards: Consolidated financial dashboards allow you to access auditable data much more quickly than manual means. You’ll also be able to drill further down into your dashboards to analyze complex transactions, performance cards for account groups, and other important information.  

Audits will probably never be fun for any accounting professional, fortunately, Sage Intacct gets them as close as humanly possible.

Get past your accounting and auditing pains 

It’s natural for SaaS companies to experience growing pains; accounting and auditing is no different. It can even be a positive thing, because it signals your financial success. 

But your growing pains shouldn’t last forever. If you’re ready to quickly and easily get rid of them, check out our recent ebook to learn more about the signs QuickBooks is slowing down your SaaS business.