Seven Tips to Optimize Your SaaS Bookkeeping Process

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Seven Tips to Optimize Your SaaS Bookkeeping Process

As a SaaS founder, bookkeeping may not be your biggest priority. But if you and your team members are planning to fundraise or tap into government tax credit programs, maintaining an accurate set of books is essential. 

By establishing a strong SaaS bookkeeping system in the early stage of your business in fact, you can: 

To help you achieve all this and more, here are seven tips to optimize your SaaS bookkeeping process.

1. Use cloud-based accounting software to manage your books

Depending on your business model, using spreadsheets to record financial transactions might suffice when you’re just starting out. However, as your revenue recognition and subscription management starts getting complicated, you’ll need a properly managed SaaS accounting system that can scale with your company.

Cloud-based accounting software like QuickBooks Online and Xero integrate easily with other apps to create a seamless flow of financial information.

Your company can then use that data to measure and monitor important SaaS growth metrics like:

  • Monthly Recurring Revenue (MRR)
  • Customer Acquisition Costs (CAC)
  • Customer Churn

Integrated payroll, billing, payment, and receipt capture tools, meanwhile, can reduce manual processes and errors. You can even connect your accounting software to your bank account to make reconciling your books every month easier. 

2. Set up recurring payments for fixed monthly billing

If yours is a subscription business with monthly client charges, it might be worth using a recurring billing tool like Rotessa or Plooto to set up and pull recurring, pre-authorized payments from client accounts. You can automatically generate and send out monthly invoices using your accounting software and use Rotessa or Plooto to collect the payments when they’re due. 

Not only will you gain a more accurate view of your company cash flow, you’ll also save time on collections and accounts receivable management.

3. Automate payments for recurring expenses

Does your company subscribe to other software with a fixed monthly fee?

If so, you can also use Plooto to:

  • Set up auto-billing through pre-authorized payments on your company debit or credit cards
  • Reduce the time and costs involved in paying recurring expenses by cheque
  • Automatically sync and reconcile vendor payments in your accounting software

By setting up recurring expense coding rules in your SaaS accounting software, you can streamline your accounts payable process and more easily manage and forecast your cash flow. 

4. Use project codes to track longer SaaS projects

Not all SaaS financial models are driven by or limited to recurring income. If your SaaS company engages in longer-term projects (where deposits are collected upfront, and revenue recognition happens as work is completed), it may be worth using project codes to track income and ensure deposit and progress invoices get linked to the appropriate projects. 

5. Set up your chart of accounts to track SR&ED expenditures

If your SaaS business plans to leverage Scientific Research and Experimental Development (SR&ED) tax incentives, you’ll want to make sure your chart of accounts is set up to track SR&ED expenditures separately for tax returns and reporting.

There are two ways to claim SR&ED expenses: you can use the traditional direct cost method or the proxy method. Whichever method you choose however, optimizing your bookkeeping will make the claims process easier. 

To capture and track the real costs your company incurs during SR&ED project execution separately from your regular business expenses, you can:

  • Set up a capstone account in your SaaS accounting software for all SR&ED-eligible costs
  • Set up sub-accounts for individual expenses like SR&ED eligible wages and supplies 

If, for example, you have employees who are 100% dedicated to your SR&ED projects, you should track their wages and benefit costs separately as and when they occur. If you’re using the proxy method, you should follow claim allowances set out by the CRA.

Either way, separating out SR&ED costs as part of your day-to-day SaaS bookkeeping process will make it easier to complete your T661 form. 

6. Capture your receipts and invoices using Dext Prepare

Whether you’re compiling expense records for SR&ED claims or need better visibility into your company cash flow, tracking receipts and invoices is crucial.

An app like Dext Prepare (formerly Receipt Bank), makes it easy for small businesses to:

  • Snap photos of their physical receipts and invoices
  • Upload them to the app
  • Store and retrieve their documents as needed (like during an audit, for example) 

Dext Prepare’s intelligent OCR technology extracts pertinent information from paper documents to help you create transactions that can be exported directly to your cloud accounting software. You can even set up rules in the app for automatically allocating certain expenses to the correct bookkeeping accounts.

Here’s an example.

Let’s say you subscribe to dedicated software on a monthly basis for use in your company’s SR&ED project. If you’ve structured your chart of accounts to include a Subscriptions sub-account, you can set up a rule in Dext Prepare to automatically allocate your monthly payment transaction to that sub-account in your accounting software. 

Capturing expenses through an app like Dext Prepare can speed up your expense-capturing process and your company’s month-end closing procedures. 

7. Outsource your SaaS bookkeeping

If you regularly find yourself bogged down by non-revenue generating tasks like bookkeeping, you should know that, as a proven method for helping entrepreneurs refocus on their core purpose, global business process outsourcing is set to hit an all-time high of $405 billion by 2027.

SaaS founders, in particular, can benefit from outsourced bookkeeping services when they’re looking to:

  • Spend more time on sales and other growth activities
  • Gain access to professional, experienced bookkeeping help
  • Take advantage of efficient, cloud-based accounting tools

With affordable, flexible monthly pricing plans, Enkel can help you optimize and manage your SaaS bookkeeping so you can get back to growing your business.

Contact us today to learn more about our accounting and bookkeeping services for SaaS businesses.

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We thoroughly research and test the apps we include in our regular workflow for Client bookkeeping services. After deciding on criteria for evaluating the software and then researching the app itself, we tested the app, noting its strengths and weaknesses. We then work with the app for at least a few weeks before deciding whether to recommend it to our readers. We use the software as it was designed for its intended tasks. For a detailed walk-through of how we select and evaluate software, please see the details of our process.

Enkel receives no consideration or compensation from software publishers for featuring their software in our blog articles.

Omar Visram
About Omar Visram
Omar Visram is the Co-founder and CEO of Enkel Backoffice Solutions Inc. Headquartered in Vancouver, Enkel provides bookkeeping, payroll, accounts payable and accounts receivable services to over 300 organizations Canada-wide.