When a SaaS business needs to move on from entry-level software

Key takeaways:

• Growth demands better tools: Entry-level accounting systems like Xero and Sage 50 work for small businesses but often struggle to meet the demands of growing SaaS companies, creating inefficiencies over time.
• Automation saves time and minimises errors: Automating tasks like revenue recognition and accounts payable can free up significant time for finance teams while reducing reliance on error-prone spreadsheets.
• Flexible reporting supports better decisions: Advanced systems that allow real-time data updates and customisable reporting can help finance teams make quicker, more informed decisions.
• The hidden costs of sticking with outdated software: Relying on manual processes, multiple tabs, and third-party tools often costs more in time and stress than expected, especially as your business grows.
• Delaying upgrades creates long-term challenges: As your company scales, inefficiencies compound. Addressing these issues sooner ensures your team has the capacity to focus on strategic priorities.

Have you spent time using Sage 50 or Xero? 

I’ve worked in a succession of SaaS businesses and other growing companies. I left Quicken behind in favour of Sage 50 but soon realised that wasn’t able to adapt when the world moved to home and hybrid working. Logging into Sage 50 remotely could take about 10 minutes and even after that, everything you needed to do would take longer than normal, so it wasn’t a viable option unless you were in the office.  

I moved several finance teams onto Xero – it’s the small business’s favourite for a reason! But an entry-level product just doesn’t have the power that a SaaS business needs as it grows.  

While entry-level software will handle transactions pretty smoothly and produce a basic set of reports, it won’t tailor reporting to your requirements. And it can’t automate complex tasks like revenue recognition, which are a core part of a SaaS company’s work.  

Apart from the time sink, the trouble with spreadsheets is that they’re highly vulnerable to errors. 

Did you know accounting software could do this? 

I hadn’t used iplicit until I worked for iplicit. It was an eye-opener.  

iplicit is in a pretty good position to know about the challenges facing fast-growing SaaS businesses because it’s one of them. 

Like most SaaS businesses, we handle a large volume of deferred income revenue recognition and prepayments. For many of those companies, there is no way of leaving this kind of work to the finance software. You either have to use third-party applications or use Excel. 

iplicit, however, makes time-consuming tasks like accounts payable simple – unlike Xero, which requires third-party tools like AutoEntry, or Sage 50, where batch invoices must be entered manually.

At iplicit, AP would take forever without automation. But thanks to built-in OCR and machine learning, it’s all done directly in the finance system. 

That said, we accountants will always want to tinker with data in spreadsheets, and iplicit allows for that. You can extract data into Excel and refresh it there so you’re always working with up-to-date information. You can’t easily do this with entry-level and legacy systems. 

Did you know accounting software could cut your month-end in half? 

In one of my previous roles, in a company similar to iplicit in size and complexity, we used to aim for a 10-day month-end. With iplicit, month-end takes five days – and three or four of those are gathering the purchase invoices and getting them into the system. 

The major reason is deferred revenue.  

I remember with Xero, there was no option to take a purchase invoice and tell the system to recognise the payment over 12 months. You would have to review the ledger in detail every month and apply those prepayments manually.  

Now in iplicit, I just take an invoice, select the revenue recognition profile I need, and everything then flows through the system automatically.  

If our CFO, Rob Steele, asks me how much we’ve spent on marketing this year, I can click on the general ledger code to get a full breakdown. I can drill down to a purchase invoice and get a copy. All this is available from the trial balance, without any need to switch between tabs/sections.  

We track KPIs like net revenue retention, churn, new bookings, logos, and marketing payback. We run queries, with iplicit, that populate Power BI or Excel. Setting up dashboards took half a day, and now it’s as simple as refreshing each month. 

Unlike other systems that require merging data from multiple sources, iplicit makes reporting seamless. You can customise columns instead of being stuck with rigid reports and when I need management info, I hit "refresh" in Excel, and it’s ready in 30 seconds.  

Are you considering value, not just price? 

SaaS businesses often start with entry-level accounting systems like Xero, but they tend to stick with them even when the software holds them back.

Finance leaders end up spending evenings in Excel or connecting with costly third-party apps, risking their entire app stack. I was one of them!  

It’s tempting to focus on price, not value in this situation.

You just assume the gap between entry-level and a more powerful system is too big for you at that stage of the business’s growth. 

Looking back, I could have saved a lot of time if I had finance software like iplicit. It would have been the perfect solution. 

To properly assess the viability of a change, you need to start by considering whether your existing software is costing you a lot more than the monthly subscription. 

I used to work with about six tabs open – including GoCardless, another platform for recurring billing, and a CRM which didn’t feed directly into Xero, so invoices had to be imported via a CSV file.

It strikes me now as mad to have all those extras! 

When is the best time to change finance software? 

In the real-world, nobody gets to focus on the big-picture, high-value strategic work 100% of the time.  

But if you’re spending countless hours in spreadsheets and doing calculations the old-fashioned way, something is holding your business back. 

Once your SaaS company has outgrown its finance software, the situation is only going to get worse.

If, like iplicit, you’re on course to double in size each year, then you’ll have twice the volume of manual adjustments to deal with in 12 months’ time and month-end will take proportionally longer.   

If you put it off, you’re going to get ever more bogged-down and stressed-out as sales rise.  

The best time to change might have been months or years ago – but the second best time is now. 

Find out more about how iplicit helps tech and SaaS companies.