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The concept of unearned revenue can easily trip up SaaS companies that offer subscription services and products on a recurring basis. Unlike when selling ordinary products, you cannot recognize the revenue earned from a subscription all at once. So, what differentiates ‘earned’ versus ‘unearned revenue’? Advance rent payments.
Scheduled payments, aka recurring billing. Scheduled payments have become a core form of revenue collection. Of course, recurring payments vary depending on the business. As the subscription universe continues to expand, you can expect to see even more subscription payment plans. What are subscription payments?
This model allowed me to work with dozens of SaaS startups using spreadsheets, while we built our financial modeling software Flightpath. After all, SaaS has many unique metrics and KPIs that can’t be communicated using only a three statement structure. You can also enter these manually, or use an export from your billing system.
Simplify accounting: Accounting can be a far bigger pain in the SaaS industry than other businesses, due to deferredrevenue and other delayed revenue forms being common. Accounting software will keep all revenue assets organized. Sometimes, software does not cooperate or you simply have questions.
Xero is a popular accounting software designed for businesses to keep a record of their finances. It also works harmoniously with SubscriptionFlow to speed-up subscription management, and track recurring payments. Tailor your invoices according to individual clients, with specific payment terms.
Revenue recognition, as per GAAP, states that payment is recognized as revenue after delivering the product or service in its entirety. Of course, that’s not how SaaS revenue works. (We We wrote more about revenue recognition here!) Financial reporting communicates a company's financial performance and results.
This is where revenue intelligence comes into play, helping companies to gain valuable insights into their revenue performance, identify growth opportunities, and drive profitability. In this blog, we will explore two key areas of revenue intelligence: deferredrevenue and expansion revenue.
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