QuickBooks limitations are holding back SaaS CFOs

As a simple bookkeeping tool, QuickBooks meets the needs of many early-stage SaaS organizations, but pressures facing finance departments put that effectiveness to the test. A new report shows there are key limitations for QuickBooks-dependent SaaS CFOs and they should move on to better alternatives.

QuickBooks limitations: what the survey says

How QuickBooks isn’t Keeping Pace with CFO Needs from CFO Dive looks at a survey of 164 financial executives, including those at SaaS companies. It finds that 75% say switching between QuickBooks and spreadsheets is a source of frustration to their teams. Finance executives use these spreadsheets to get the information and reporting they need in their daily work, which points out a major shortcoming in QuickBooks reporting. QuickBooks lacks the reporting needed by growing SaaS organizations. Absent real-time SaaS metrics include:

• Monthly and annual recurring revenue
• Net dollar retention
• Cash flow
• Bookings and renewal forecasts
• Churn
• Customer acquisition cost

In addition, these survey respondents note additional QuickBooks challenges, including:

• Data accessibility issues (29%)
• High occurrence of imbalances/troubleshooting (27%)
• Too much manual data entry and reentry (26%)
• Upgrades/maintenance (26%)

Using QuickBooks, the monthly consolidation-and-close process is a time-consuming endeavor. Almost nine-out-of-ten Finance leaders report it takes up to 14 days to complete the close every month. The three areas they see as the biggest obstacles in the monthly close are:

• Data inaccuracies (17%)
• The impact of reconciliation and investigations (15%)
• Technology limitations (14%)

Embracing a solution capable of a continuous close, as well as one with state-of-the-art collaboration tools for enhancing data accessibility, makes Finance more strategically valuable to the organization. That result can’t be achieved using QuickBooks, making it the wrong choice for SaaS companies that aspire to reach the IPO stage and beyond.

QuickBooks limitations: Growth demands change

CFOs can’t afford to let spreadsheet-based processes and monthly close bottlenecks exhaust their teams. QuickBooks challenges come when CFOs must make strategic contributions to the business. Nearly three-out-of-ten financial executives report the main pressure facing finance departments or

CFOs is the increased expectation to provide insights to the C-suite. At SaaS companies, growth-oriented CEOs want investor-grade reports to earn confidence in the business. Another top pressure includes increased expectation to work across silos and collaborate with other departments.

As they face these pressures, QuickBooks-burdened CFOs recognize there’s a lot of opportunity for process improvement and transformation. When asked what would most benefit the finance function, they respond:

• Greater flexibility to adapt current finance solutions (23%)
• Minimizing the need to go back-and-forth between financial software and spreadsheets (18%)
• Deeper insights via reporting and dashboards (18%)
• Achieving faster access to reports and insights (17%)

Given these findings, it’s no wonder 37% of the CFOs surveyed are actively considering switching to a solution other than QuickBooks or QuickBooks Online.

QuickBooks limitations: SaaS CFO challenges

There are usually certain triggers that signal SaaS companies are outgrowing QuickBooks and must move to a robust, modern cloud-native solution. These include:

• The need to automate usage, subscription pricing and billing scenarios to get paid faster
• Seeking outside investment that would require GAAP compliance
• Spending too much time in spreadsheets
• The need for easy-to-use revenue recognition with automated ASC 606 and IFRS 15 compliance
• The need for a centralized system of record for real-time reporting, in-depth analysis, forecasting and budget vs. actuals 
• Multiple business entities with no consolidated chart of accounts
• Remote data access requirements

Additionally, QuickBooks doesn’t have a native integration to Salesforce, doesn’t offer combined billing, and cannot do credit memos to existing contracts, forcing finance leaders to do billing and revenue recognition in spreadsheets.

When asked what barriers finance leaders face in adopting new technologies, 31.5% cite budget constraints. There’s certainly additional cost in moving from QuickBooks, but it has hidden costs that executive should consider. QuickBooks simply wasn’t designed to provide professional financial management capabilities for growing SaaS organizations with sophisticated, evolving demands that require better visibility into financial and operational performance. If you’ve been feeling like you’re outgrowing QuickBooks, you’re hardly alone.  Explore the benefits of switching with this five-step transition plan.

How QuickBooks Isn’t Keeping Pace with CFO Needs examines the current condition of CFOs using QuickBooks and why the product is less equipped for the future of finance than SaaS CFOs may think. To gain additional insights and see more of the research results, download the report here.