All Modern Accounting Stacks Should Have These Characteristics
Before the days of companies selling Software-as-a-service (“SaaS”), technology stacks were meant to handle straight forward transactions……sign a customer, send an invoice, record the sale, collect the cash and move onto the next one.
Today, however, SaaS has become the prevailing business model and the whole process from signing a customer, doing a pilot, sending the recurring invoices, recognizing SaaS revenue, and preparing all of the various financial insights (MRR, churn, upsells, etc) has become a lot more cumbersome. Excel has become everyone’s best friend, but with a deep love-hate type relationship.
As you would expect, large companies have the money to set up expensive customized systems that will automate these tasks, but we cannot say the same for most small and medium enterprises (“SMEs”).
These systems tend to be too expensive and complicated for the small businesses to operate. As a result of this, most small businesses have to rely on less costly solutions to simplify their operations and track their impact.
But this is not where the problem lies. Irrespective of costs, there are fundamental characteristics that all modern accounting stacks should have.
Accounting Stack Explained
An accounting productivity stack is a group of connected financial tools or systems. They are used to support, run, optimize, and improve the organization’s financial, accounting, and operational processes. It is a collection of disparate systems to achieve a unified financial objective.
Investing in the various components of your accounting stack is a crucial step to running a modern organization, you cannot afford not to!
You Need This in Addition to Your Accounting Software
Online Document Management
Day to day work in the back office requires the movement of a lot of different documents. From purchase orders, sales contracts, invoices, vendor bills, legal documents, there are many reasons to have a good way to store documents. Also, depending on your locality, certain documents may have regulatory retention requirements.
An effective online document management system is the backbone of accounting workflow efficiency.
- Allows for easy organization of your documents
- Easy but secure access and permissions – only the right people access the right documents. When those people leave the organization, their access is automatically terminated.
Subscription Management System
Many SaaS companies use an accounting system such as QuickBooks to handle recording of financial transactions, however those transactions are often the end point of an entire process, sometimes referred to as Order-to-Cash. Let’s dig a little deeper.
Consider a typical SaaS contract: Two products, in year one; one recurring (eg subscription), one non-recurring (eg set-up fees). In the 2nd year the recurring product will continue and may or may not have a price increase.
- Setting up the billing: recurring vs non-recurring.
- Remembering when to send the bills, whether monthly or annually.
- Creating a revenue recognition schedule with easy to understand deferred revenue – something absolutely necessary for most SaaS companies.
- Creating SaaS Metrics so you can accurately track things like MRR, ARR, churn, etc.
Thousands of dollars can be saved each month by investing in a good subscription management system. Just make sure it integrates easily with your accounting system.
Spend Management System
Does your accounting system have all of the necessary requirements to help you manage business and employee expenses with all of the approval workflows? If the answer is no, then you may want to consider looking into a system to handle this work.
Sometimes referred to as procure-to-pay, these systems will help with ensuring vendors are correctly set-up, bills with documentation are entered, and most importantly are reviewed and approved before any cash leaves the bank account.
Creating the right accounting tech stack can pay serious dividends over time in saved resources and more importantly help your employees work on higher value things rather than mundane data entry tasks. Start by evaluating your current systems and then source ways to automate time-consuming and repetitive tasks with some solutions in the market today. There are many products online that solve for some of these needs. TrueRev is one product that fits perfectly for many SMBs. TrueRev easily integrates with QBO, allows you to move away from spreadsheets and at their price point – makes sense for most looking for a solution. With a demo and/or a free trial period, it’s a great low-risk way to test if TrueRev can work for your company.
Ton’s of good products will offer a demo and/or a free trial period, which is a great low-risk way to test if it can work for your company.