For SaaS companies, having accurate books is imperative. At any moment in time, you need access to reliable financial data to make better decisions for the business. This is especially important if you’re in a growth stage, looking to borrow or raise funds. Banks and investors will want to see up to date, accurate books.
There are a few options when it comes to handling bookkeeping and accounting in your company:
- You could do it yourself, which is perfectly acceptable for a smaller business.
- As you grow, you might decide to have an in-house SaaS accounting department with full time employees that conduct your bookkeeping, payroll, monthly reporting, etc.
- A third option is to outsource your accounting functions. According to Grand View Research, the global business process outsourcing market is projected to reach USD 435.89 billion by 2028, up from USD 232.32 billion in 2020.
Outsourcing is growing in popularity globally amongst businesses. Let’s review 7 reasons to outsource accounting for your SaaS business:
1. Save Time
As a business owner or founder, would you rather spend your time reconciling credit card statements or perfecting your product? Instead of reviewing your books for places to cut expenses, wouldn’t you rather be networking with investors for fundraising? When you’re a business owner, your time is finite and you should invest it wisely in growth activities.
For many businesses, employing a team of accounting personnel is an unnecessary expense. Outsourcing your SaaS business’ accounting to a dedicated third-party resource is a more efficient and streamlined option, giving you back the time to focus on your core business.
2. Save Money
If your business is in a growth stage or is cash strapped, every headcount is precious. By outsourcing your bookkeeping you can save money on office overheads. Not only do you no longer have to pay a full-time bookkeeper’s salary, there are significant savings on benefits, IT equipment, payroll deductions, training and more.
Outsourced SaaS accounting services are also more cost-effective than year-end accountants. If you leave your bookkeeping to your year-end accountant, your year-end bills are going to be high. An outsourced bookkeeper will maintain your accounting records year-round, saving you a significant amount of time and money when tax season rolls around.
3. Get access to accounting expertise & efficiency
You did not start your SaaS business to become a bookkeeper or accountant. As your SaaS business grows in complexity, you might not be equipped with the right financial knowledge to keep your books accurate.
Most outsourced bookkeeping and accounting firms have a team of experienced bookkeepers, CPAs, payroll experts and controllers on staff who will be reviewing your books, ensuring that the monthly reports are accurate. Bookkeeping is their expertise and they will be able to do more than just keep accurate records and prepare accounts. In addition, you get their expertise year-round, not just at the end of the year during tax time.
A good outsourced SaaS accounting service will also be able to:
- Uncover inefficiencies in your existing subscription business accounting processes.
- Identify unnecessary expenses that can be cut or reduced.
- Suggest tools for improving your system, including automation.
- Provide accurately monthly financial statements – balance sheet, income statement, and cash flow statement.
- Generate custom financial reports for tax filing and external funding.
- Monitor your performance obligations to funders.
If your SaaS company is eligible for the Scientific Research and Experimental Development (SR&ED) tax incentive, an outsourced bookkeeper like Enkel can help you track all your SR&ED expenses separately.
Ultimately, the cost of an outsourced bookkeeping and accounting company is easily recouped when you add the opportunity cost of the time you as the owner gain back with the savings that are realized from accounting inefficiencies and unnecessary expenses.
4. Scale with you
If your SaaS business is growing, both in team members and subscriptions, you will undoubtedly need to restructure your accounting team to fit your growth. However, more team members come with more overhead costs.
Outsourced SaaS accounting service providers have the ability to scale up and down with your business as needed. They’ll introduce tools to automate your SaaS business’ accounting process and these tools can handle increased volumes of transactions.
Your books will only get more complex as you scale your business. When you outsource accounting to Enkel, we act as a partner alongside you in your growth journey. Whether you’re a small start-up or a growth stage company trying to raise seed funding, we will provide you with up to date books and accurate reports to support your growth.
5. Provide greater visibility into your financials
Keeping your financial information up-to-date throughout the year will make your life much easier when you’re looking to raise funding or finding ways to improve your business.
A good outsourced accounting services partner will ensure that your financials are always accurate and available to you. The bookkeeper’s job is to stay on top of your numbers and help you understand your cash flow – where you’re losing money and where you should be investing your efforts for maximum return.
6. Stay audit ready
Nobody likes a financial audit. It’s an arduous process even at the best of times, and it can happen to any company. Knowing that your books are up to date, accurate, and everything has been carefully documented can relieve a lot of the stress associated with an audit.
A good bookkeeping service will ensure all of your financial transactions are properly documented and your source documents are stored safely in the cloud, making the audit process much smoother.
7. Peace of mind
With bookkeeping taken off your plate, you no longer need to worry about the day to day management of your numbers, hiring and training new accounting staff, or building your own accounting processes. Your outsourced accounting provider will give you peace of mind while you focus on improving your business and operations.
If you’re getting ready to raise funding for your business, investors can trust that the numbers you’re showing them are accurate and reliable. At Enkel, we can also help generate the necessary historical financial reports required by investors so you’re not scrambling to get your books in order at the last minute.
Outsourcing your bookkeeping is not an entirely hands-off process. At Enkel, for example, we might still have some questions regarding the coding of transactions or others, but your involvement need only be small, and also keeps you involved just enough to know that everything is being taken care of.
Enkel is a Canadian online bookkeeping and accounting services company. We work with a wide range of businesses, including SaaS companies, to create carefully managed systems for revenue recognition, cash collection and more. Contact Enkel to find out how we can keep your books up to date, and get your statements ready for a raise when the time is right.