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Clayton Whitfield


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Why It's Better to Scale Your Financial Operations Without Spreadsheets

[fa icon="calendar'] May 8, 2018 3:57:11 PM / by Clayton Whitfield posted in Spreadsheets, Data Integrity, Financial Operations, SaaSBusiness

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Sometimes in life, making ends meet is the only option. We’ve all faced situations where doing the thing that is “good enough for now” is the only option. Managing the financial operations of your SaaS business shouldn’t be one of those times.

In their early days, most recurring revenue businesses manage financial operations with spreadsheets. Instead of robust finance systems that are expensive, they create homegrown SaaS financial operations by cobbling spreadsheets together with traditional accounting software. And while that may be good enough when a business is in its infancy, it will create a great deal of chaos, overhead and problems down the road. 

Financial Operations that Scale

If you are managing your SaaS finances with spreadsheets, it’s not too late, but it’s important to put a plan in place for reliable financial operations that will serve your business now and in the years to come.

Here’s why.

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SaaS Revenue Recognition Challenges with QuickBooks (And What You Can Do About It)

[fa icon="calendar'] Apr 25, 2018 12:21:12 PM / by Clayton Whitfield posted in Financial Operations, QuickBooks, Revenue Recognition

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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.

There’s a reason revenue recognition gets complicated with subscription businesses

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.

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Don’t Miss the Low-Hanging Fruit—Five Best Practices for SaaS Renewals

[fa icon="calendar'] Oct 4, 2017 2:37:03 PM / by Clayton Whitfield

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You’ve worked hard to acquire your customers, but holding onto them through multiple renewal cycles is really the key to subscription business success. Many SaaS businesses rely on auto-renewals to support the business. This is integral to the subscription business model, but it doesn’t mean you can kick back and relax. Common pitfalls related to renewals include:

  • A lack of data or bad data which prevents you from seeing accurate renewal rates.
  • Relying on untrained non-sales staff to handle renewals.
  • Poor processes (based on the above) that result in customer contracts expiring without a sales call.
  • Absence of knowledge about the best way to engage renewing subscribers.
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Beyond Quickbooks - Advanced Forecasting for B2B SaaS

[fa icon="calendar'] Sep 24, 2017 7:49:20 PM / by Clayton Whitfield

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When it comes to forecasting for a SaaS business, traditional financial metrics won’t get the job done. The lack of good financial data and metrics remains a big problem for most early stage subscription businesses, and even many established SaaS companies. Chances are, your business relies on outside funding or is subject to board oversight—or both. And the decisions that funders and boards make rely on accurate financial forecasting. A SaaS business that can efficiently and accurately generate, present and consume financial forecasting data makes better decisions for continued success. Don’t let your financials become a liability. Instead, you should be using forecasting data as a strategic tool to drive growth, generate new revenues and increase profitability.

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Nightmare on Excel Street - Multi-currency Accounting with Deferred Revenue Recognition

[fa icon="calendar'] Jul 21, 2017 1:56:44 PM / by Clayton Whitfield

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Managing subscriptions in a global economy doesn’t have to be scary. But it sure feels that way sometimes. To compound matters, the finance team is frequently the most under-resourced department in a growing SaaS business. When you’re struggling to do more with less—and to maintain accurate revenue recognition—adding to the growing maze of spreadsheets and manual processes that now accompany your general ledger sounds like a nightmare.

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Buttoned Up Revenue Recognition Metrics for SaaS Businesses

[fa icon="calendar'] Jul 13, 2017 4:54:36 PM / by Clayton Whitfield

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Chance are, your early-stage SaaS business has a business-casual dress policy, but your financial metrics still need a buttoned-up Wall Street polish to attract savvy investors or potential acquirers. Much like a bespoke power suit would break the clothing allowance, powerful financial management suites are far too expensive to install and implement just to gain accurate revenue recognition metrics. So, you make do with a haphazard assortment of tools like QuickBooks and SalesForce manually pieced together with Excel spreadsheets and a lot of copying and pasting. Needless to say, this doesn’t achieve the cohesive look you’re going for.

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MRR vs. ARR

[fa icon="calendar'] May 11, 2017 9:47:50 AM / by Clayton Whitfield posted in MRR, Investors, Financial Operations, ARR

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Answers to Common Questions about MRR and ARR

MRR is the most popular method of normalizing recurring revenues for subscription analytics. Normalized revenue provides a clearer picture of performance, especially when reported in categories relative to prior periods.

So, what's up with the less-talked-about cousin, ARR? Are there any real differences, other than the obvious? Why use ARR vs. MRR in your business? How will bankers and VCs react to ARR vs MRR?

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4 Ways Spreadsheets Are Failing Your Recurring Revenue Business

[fa icon="calendar'] Apr 25, 2017 10:46:07 AM / by Clayton Whitfield

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Are your spreadsheets hurting your SaaS business?

There are times in life when making ends meet is the only option. We’ve all faced situations where the only option is to take the path of least resistance or do what is “good enough for now.” Managing the financial operations of a recurring revenue or SaaS businesses is not one of those times.

In their early days, most recurring revenue businesses manage financial operations with spreadsheets, which are cobbled together with a number of different tools and then human effort to bring it home. And while that may be good enough when a business is in its infancy, it creates a lot of chaos, overhead and problems down the road.

The good news is that it’s never too late to put a plan in place for solid financial operations that will serve your SaaS business now and in the years to come. If you’re managing your SaaS finances using spreadsheets, it’s probably time to reconsider your approach.

Here are the 4 ways spreadsheets are failing your recurring revenue business:

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Why Go GAAP Early in SaaS?

[fa icon="calendar'] Apr 5, 2017 3:29:55 PM / by Clayton Whitfield

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In most emerging and growth SaaS businesses, the focus is on cash flow and growth. Bookkeeping and choice of accounting methods is many times left to whoever is sending the invoices and paying the bills. And the method tends to be whichever is easiest and least expensive. Since you have to file taxes and for most early stage companies, taxes are done on a cash basis, then the company books tend to remain that way. What you save in bookkeeping costs may really cost you in the end.

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Don’t Ignore SaaS Metrics in Early Stage Success

[fa icon="calendar'] Jan 11, 2017 10:45:55 AM / by Clayton Whitfield

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Several months ago, I met an entrepreneur with a high-growth SaaS business. Being in the business of selling tools to measure subscription business metrics, I jumped right in, my mind set on a quick close.

I've been in sales for over 25 years, so I proceeded to knock down objections. The first, second, third objections came, and then more. Eventually, I realized there was no pain and backed off. Out of his mouth then came, "We'll start to look at metrics when we slow down, when we hit a month that wasn't bigger than the previous month."

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