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Unearned Revenue: What it is and What it Means for Subscription Businesses

Stax

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. This is important for subscription businesses due to recurring advance payments.

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Xero vs QuickBooks Online: Which Accounting Software is Best for Your Business?

Stax

The former will deal with purchase orders and ringing up sales at the register, while the latter will need capabilities related to invoicing and managing client records. Payroll – Companies in need of payroll will also find Xero the winner through its partnership with Gusto to give you full-service payroll integrations.

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5 Things to Know About Accruals

SaaSOptics

Revenue accrual is what occurs when a sale is recognized by the seller, but not yet billed to the customer. It’s a financial practice used in businesses with revenue timelines that would otherwise be delayed. Revenue accrual is commonplace in the service industry, because these projects can take months—or years—to complete.

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The top 5 subscription payment services: how to choose the best

ProfitWell

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?

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What Is Unearned Revenue and How to Account for It

Baremetrics

You can often find yourself receiving money long before you provide agreed upon services or, conversely, providing services and then waiting for payment. But, what are the accounting ramifications of customers paying you before you render services? This puts you in the position of having “unearned revenue”.

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What Is Working Capital?

Baremetrics

Baremetrics makes it easy to collect and visualize all of your sales data so that you always know how much cash you have on hand, which clients have paid, and who you still owe services to. Accounts receivable includes the revenue that your company has recognized but not yet collected. Many SaaS businesses have zero inventory.

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SaaS Balance Sheet Examples

Baremetrics

Accounts receivable includes the revenue that your company has recognized but not yet collected. As you receive payments for the services you’ve already provided, this account will decrease while your cash account will increase. These are typically items that are used to operate your business over the long term.