Accounting for SaaS: What it is, How it Works & Software Choices

Zoho Books is a cloud-based accounting program that is ideal for startups and small businesses — especially those already using Zoho’s suite of tools. Xero’s reporting capabilities will be of particular interest to SaaS executives. Most SaaS businesses will require the Advanced plan, which costs $200 per month.

Consider factors like the size of your team, your current accounting processes, necessary integrations, and your budget when making your decision. Don’t hesitate to take advantage of free trials and demos to test different options. SaaS accounting software will likely offer even deeper integrations with other business tools, including CRMs and ERPs. This seamless flow of data between systems will provide a more holistic saas accounting view of the business, enabling better decision-making.

Just imagine how much time you save as you eliminate unnecessary email exchanges. Three major considerations when working on SaaS accounting are bookings, billings, and revenue. Discover how businesses like yours are using Baremetrics to drive growth and success. Understanding why customers leave, using data and insights, is the first step to retaining them. View all your subscriptions together to provide a holistic view of your companies health.

Which SaaS Accounting Software Should You Choose?

• 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.
• For high-volume SaaS businesses, automated revenue recognition solutions, like those offered by HubiFi, can be particularly valuable.
• The balance sheet shows a “snapshot” of the company’s worth and net holdings at the end of the period.
• NetSuite is a comprehensive ERP system suitable for mid-sized and larger companies.
• There are tons of resources available online, from in-depth articles and comparison sites to lively discussions in industry forums.
• SaaS companies require crucial accounting features like subscription billing, CRM integration, online payment processing, and cash flow management.

The goal is to simplify ​​incorrect revenue attainment and reconciliation efforts. That’s why it’s vital to assess the integration capabilities of any SaaS accountancy platform. That’s why you need to choose a platform that can scale with your business and meet your needs in the future.

Features like automated revenue recognition ensure compliance with standards like ASC 606, saving you time and reducing errors. Software also streamlines expense management, subscription management, and recurring billing. Plus, integrations with your existing CRM and other business tools create a unified view of your operations.

Revenue Recognition Challenges (and Tips) for Software and SaaS Companies in 2025

This automation not only saves you time but also reduces the risk of errors and ensures accurate financial reporting. Keeping compliant with these standards is crucial for maintaining investor confidence and avoiding potential legal issues. When a customer pays for a subscription upfront, you haven’t actually earned that revenue yet. It’s considered deferred revenue until the service is delivered over the subscription period. Accurately tracking and managing deferred revenue, especially with varying billing cycles and subscription changes, requires specialized accounting software.

As the software-as-a-service (SaaS) industry grows, accounting for SaaS companies has become increasingly important. SaaS accounting is the process of managing financial records and transactions for SaaS companies, including tracking revenue, expenses, cash flow, and taxes. Every company has some way to track income, expenses, assets, and liabilities. Due to their unique business model, SaaS companies will have some industry-specific variations in their accounting practices. Their financial statements will also have very different metrics and ratios than other online business types. FreshBooks also provides the necessary foundations for SaaS accounting.

It Improves a Painful Workflow for Your Team

These tools help you record financial transactions and even vital information like bank details. That’s why cloud developers use high-grade encryption, backup systems, and even multi-factor authentication. They are usually recorded over a period, usually monthly or for the whole year. If your accounting isn’t legit, neither are your metrics or your business decisions.

With increasing amounts of sensitive financial data stored in the cloud, the future of SaaS accounting will undoubtedly prioritize enhanced security measures and fraud prevention capabilities. Think advanced encryption, multi-factor authentication, and robust audit trails. It needs to integrate seamlessly with other critical tools in your tech stack, like your CRM, payment gateway, and other business applications.

Software for Specific Needs

It prioritizes security and uses the highest bank standard encryption to prevent breaches. From startups to large enterprises, choosing the right accounting system is crucial for any business. With the advancement in technology, the days of using Excel spreadsheets and manual processes are over. Audits can be painful, so it’s no surprise that many companies don’t go through them unless it’s required (either by investors or some regulatory standard).

This model allows you to customize your software package and avoid paying for unnecessary functionalities. FreshBooks, known for its simple interface and focus on invoicing, uses feature-based pricing, ranging from $17 to $55 per month. However, it might lack the advanced features required by larger SaaS companies. Carefully consider your essential features to determine if feature-based pricing is the right approach.

Software designed for SaaS businesses tackles the specific accounting hurdles these companies face. Let’s explore how the right tools can simplify your financial operations. Occupier offers lease management solutions to help you stay on top of lease accounting requirements, ensuring compliance and simplifying lease management. Similar to QuickBooks Online, Xero offers a simple platform for basic accounting needs.

Baremetrics plays a role in your SaaS accounting by providing you the metrics you need to fill out your statement sheets. Discover how Stripe Analytics stacks up against Baremetrics in terms of features, ease of use, and overall benefits. Evaluate how Baremetrics compares to ChartMogul in terms of features, usability, and value. Have an idea of how other SaaS companies are doing and see how your business stacks up. The best consultants, agencies, and specialized services to help you grow.