Revenue Recognition for SaaS Businesses

This article provides options for SaaS companies to automate revenue recognition.

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What is Saas revenue recognition?

SaaS (software-as-a-service) is a business model in which a company provides access to software applications over the internet, on a subscription basis. Revenue recognition for SaaS companies typically involves recognising revenue on a subscription basis, over the term of the subscription. This means that a SaaS company would recognise a portion of the revenue each month.

What is SaaS revenue recognition software?

SaaS revenue recognition software ensures that revenue is recognised correctly and according to accounting standards.  The most sophisticated programmes will use smart automations, such as text recognition, to capture the data directly from invoices.  Other programmes can require that all contractual terms are entered manually, which creates a longer setup process.

SaaS revenue recognition software will also include the ability to track all critical SaaS metrics including annual recurring revenue (or ARR), and monthly recurring revenue (MRR), customer acquisition costs (CAC) and lifetime value (LTV).

Read about ScaleXP SaaS metrics automation here.

Read our latest SaaS benchmarks here.

Who are the leading SaaS software providers?

The two leading SaaS revenue recognition providers are Maxio and ScaleXP.  Maxio requires all transactions to be processed through their platform and takes a % of revenue as their fee. ScaleXP can import data from any payment platform (bank transfer, Stripe, any other provider). The fee is set, making it much less expensive as companies scale.

ScaleXP is available on both the Xero and Quickbooks app stores.

Read about ScaleXP’s revenue recognition automation here