Accounting Software for SaaS Companies

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Why do SaaS companies need accounting software?

Large and small businesses alike have discovered the hard way that Excel is often inadequate for their accounting needs. Take JPMorgan Chase's $2 billion loss, which was mostly caused by manual inaccuracies in Excel spreadsheets.

SaaS startups, especially, have accounting and budgeting requirements that are difficult to meet with standard accounting software. Many subscription-model SaaS firms, for example, rely on measuring Monthly Recurring Revenue (MRR). Calculating such metrics manually in an application like Excel is also quite tough.

Some of these applications (like measurement of MRR, among other SaaS-specific accounting requirements) are quite common throughout all enterprise-level software available today. Others are more difficult to come across, which is why we've narrowed it down to only the top 10 accounting tools that can assist SaaS startups with their accounting and financial reporting requirements.

What should you look for when choosing vendors in this space?

Accounting software for Software-as-a-Service (SaaS) startups should provide the following features:

Scalability

Because most SaaS startups are growth-oriented, they'll require accounting software that can smoothly scale with the startup as it grows.

Automation

SaaS is a rapidly expanding sector that requires automation. No one really is interested in spending all of their energy on accounting, so founders need a system that's as cutting-edge as the service they offer. Automation lets founders worry less about their bookkeeping and more about the business.

Multi-business Support

SaaS is a broad term that refers to a variety of business models. The application you choose must propose a solution that takes this into consideration.

Top 10 Accounting Software for SaaS Companies

Quickbooks Online

Description: QuickBooks Online is a small business accounting software and application that lets founders operate their startups from anywhere at any time.

Best for: Small to medium-sized businesses

Cost: There are 4 tiers of pricing:

Simple Start - $12.50/mo
Essentials - $25/mo
Plus - $40/mo
Advanced - $90/mo

Evaluation of Key Criteria:

Scalability: If you’re planning to scale your business, Quickbooks is the perfect pick for you.
Automation: QuickBooks offers a number of ways to automate and manage your accounts receivable, including setting up recurring invoices and overdue payment reminders.
Multi-Business Support: Yes, you may use the same QuickBooks Online account to run as many businesses as you like. Each startup you launch will require a separate subscription, but you may log in with the same credentials. This allows you to switch between startups fast, allowing you to handle things more effectively.

Pros:

Handy automation features
Detailed payroll features help with management

Cons:

Inability to revert to a previous version
Expensive to maintain and add features

Freshbooks

Description: FreshBooks makes it easy to know exactly how your startup is performing with its straightforward dashboard and reports.

Best for: FreshBooks is cloud-based accounting designed exclusively for the self-employed and their teams.

Pricing: There are 4 tiers of pricing:

Lite (5 Billable Clients): $6/mo
Plus (50 Billable Clients): $10/mo
Premium (Unlimited Billable Clients): $20/mo
Select (Unlimited Billable Clients and Specialized Features): Custom Pricing

Evaluation of Key Criteria:

Scalability: Freshbooks scales in tandem with your startup.
Automation: Yes, Freshbooks is completely automated, from creating an invoice in no time (with ready-to-go invoice templates and fields that are pre-populated) to sending automatic late payment reminders, so that you don’t have to worry about following up all the time.
Multi-Business Support: You can set up as many startups as you need, as well as be invited to as many other businesses run by other FreshBooks users.

Pros:

Excellent invoice-to-payment functionality
Detailed time tracking of work and payments

Cons:

Bugs in FreshBooks’ email click-throughs and automated expenses
Its metrics, goal-setting, and reporting features can be better.

Xero

Description: It's simple to keep track of your bills and invoice your clients using Xero. Get a clear picture of what bills are due for payment and which invoices are outstanding or paid, making it easier to comprehend and manage your cash flow.

Best for: All small and medium-sized businesses and accounting and bookkeeping practices

Pricing: There are 3 tiers of pricing:

Early: $11/mo
Growing: $32/mo
Established: $62/mo

Evaluation of Key Criteria:

Scalability: All of Xero's plans have scalability features. You may add an infinite number of team members, but the more than 700 connections with other applications available through their industry-leading API is the main reason why it stands out from other accounting solutions.
Automation: Yes, Xero offers a wide range of online payment tools so that your customers can easily pay the Xero invoices.
Multi-Business Support: You can separate one Xero organization into multiple divisions using tracking, and all your reports are combined.

Pros:

Integrates payroll well
It's very user-friendly and intuitive.

Cons:

Doesn't support Exchange Trade Products (ETPs)
No built-in "Debtor Chasing" function

Stripe

Description: Stripe is a technology company that builds economic infrastructure for the internet.

Best for: Any business that wants to accept payments online

Pricing:

Stripe is a pay-as-you-go payment processing platform with flat-rate, transaction-based fees. Overall, you’ll pay 2.9% plus 30 cents per transaction to accept card payments online and 2.7% plus 5 cents to accept in-person payments with Stripe. It does not charge monthly or annual fees. In general, the only costs you’ll incur will be transaction fees, otherwise known as credit card processing fees.

Evaluation of Key Criteria:

Scalability: Even if you don't know how to code, almost every tool Stripe offers can be scaled to your startup. Stripe can help you with anything -- from billing to corporate card payments to the capability to launch your own online marketplace.
Automation: Yes, Stripe is fully automated.
Multi-Business Support: If you have multiple projects or startups that operate under the same legal entity, you can use the same tax ID and business information across multiple accounts on Stripe. Make sure to provide suitable public business information to avoid customer confusion.

Pros:

The dashboard and reports are excellent.
Good customer support

Cons:

Recurring donations are tricky to set up.
Geo-restrictions on payment gateways

Gusto

Description: Gusto is a modern, online people platform that helps small businesses take care of their teams.

Best for: Businesses of all sizes

Pricing: There are 4 tiers of pricing:

Core: $39/mo base price + $6/mo per person
Complete: $39/mo base price + $12/mo per person
Concierge: $149/mo base price + $12/mo per person
Select: Custom Pricing

Evaluation of Key Criteria:

Scalability: Gusto is a great payroll software option for startups and small businesses that don't plan on scaling at a rapid pace.
Automation: Yes, Gusto is completely automated.
Multi-Business Support: Gusto users can have more than one profile associated with a single email address — like employee accounts and administrator accounts — and can also have one email address associated with multiple companies.

Pros:

Accurate filings and tax payments
Great time tracking that automatically syncs with payroll

Cons:

Could be expensive for many startups
No geo-tracking for time tracking

Fondo

Description: Fondo helps startup founders protect and extend their runway.

Best for: Early-stage startups

Pricing: Get an instant quote from Fondo's website based on your annual startup expenses.

Starting at $1650 per month

Evaluation of Key Criteria:

Scalability: Yes, Fondo can scale with early-stage startups with a fair level of competence.
Automation: Yes, Fondo integrates with the services your startup needs to run smoothly.
Multi-Business Support: It appears that Fondo can offer multi-business support.

Pros and Cons: Not available

Bill.com

Description: Bill.com streamlines the administration of accounts payable and receivable to improve financial process efficiency. Artificial intelligence (AI) and machine learning are used by Bill.com to decrease data input and human errors.

Best for: Bill.com works for organizations of all sizes, from small businesses to mid-sized companies. It also serves accounting professionals and firms through its Accountant Partner Program.

Pricing:

Essentials: $39 user/month
Team: $49 user/month
Corporate: $69 user/month
Enterprise: Custom Pricing

Evaluation of Key Criteria:

Scalability: Yes, almost all features of Bill.com support scalability.
Automation: Yes, Bill.com automates your accounts receivable process by digitizing the way your users go about paying you.
Multi-Business Support: If you already have a Bill.com login ID, you can easily add additional startups to access the platform with the same login information.

Pros:

E-payments: easy to use; the vendor submits their direct deposit info directly.
QuickBooks Online: works really well with QuickBooks.

Cons:

Unclear instructions on how to accept payments
Limited on integrations

Dext

Description: Makes startups more productive, profitable, and powerful with better data and insights. Dext Prepare's accounting software gives you all the tools you need to capture, upload, and track your finances.

Best for: Entrepreneurs and SMEs

Pricing:

Business Plus: $20/mo (billed annually)
Premium: $40/mo (billed annually)
Enterprise: $60/mo (billed annually)

Evaluation of Key Criteria:

Scalability: Yes
Automation: Yes, all their processes are fully automated
Multi-Business Support: Yes, Dext supports multiple businesses under the same login information.

Pros:

Ease of use
Wholesale pricing

Cons:

Inability to publish line items to the inventory of your accounting software
Does not automatically process uploaded bank statements

Harvest

Description: Harvest is modern time tracking software –- for less effort and improved profitability.

Best for: For businesses of all sizes

Pricing:

Free: 1 Seat/2 Projects ($0 forever)
Pro: Unlimited Seats/Unlimited Projects ($12 per seat per month)

Evaluation of Key Criteria:

Scalability: Yes
Automation: Yes, Harvest is fully automated and integrated with dozens of tools, including Asana, Basecamp, Jira, PayPal, QuickBooks, Trello, and Xero.
Multi-Business Support: Available

Pros:

Harvest’s customer support does a commendable job.
The ability to track hours for projects or tasks is extremely helpful for those non-total-project invoices.

Cons:

Notifications can't be configured for a project
The time-tracking app should be simple for the multitude of non-admin users.

Zoho Books

Description: Zoho Books is online accounting software that manages your finances, keeps you tax compliant, automates business workflows, and helps you work collectively across departments.

Best for: Freelancers, medium-sized and small-sized businesses

Pricing: Start with the 14-day free trial and, later, subscribe to a plan that fits your startup's needs. Zoho Books is available in 4 plans:

Free: $0, for businesses with a turnover of <50K USD per annum
Standard: $15 per organization, per month, billed annually
Professional: $40 per organization, per month, billed annually
Premium: $60 per organization, per month, billed annually

Evaluation of Key Criteria:

Scalability: Because of its prominence as a worldwide industry standard, Zoho unquestionably excels in terms of scalability.
Automation: Yes, Zoho Books offers automation. It is especially competent at automating business workflows.
Multi-business Support: Zoho Books allows you to launch multiple startups under a single account.

Pros:

User-friendly
Integrates with other Zoho products like Zoho CRM, Zoho Creator, and Zoho Flow.

Cons:

Not among the most reliable bookkeeping systems for an IRS audit
Complexity in advanced custom reporting

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