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.