Is Your Software Company Ready to Leave QuickBooks Behind?

In the beginning, your business model was simple. You developed a piece of software and then licensed it to a handful of customers. QuickBooks met your basic accounting needs, and tracking licenses and revenue recognition in a separate spreadsheet took only a few minutes a month.

You've come a long way since then. Your customer base has ballooned, and you offer a number of different licensing methods, from one-time purchases to software-as-a-service, all with different contract dates and billing terms. You can no longer afford to devote resources to an accounting system that can’t manage these aspects of your growing business.

Following are three areas where manual processes may be eating up your time and creating the possibility for errors and revenue leakage:

• Subscriptions. The appeal of the recurring revenue stream has driven most software companies to move from one-off licenses to subscription-based models. How do you manage the various contract and billing terms? If you’re on QuickBooks, then you probably have built a monster spreadsheet to keep track of all of those variables. But what happens when a subscription term is coming to an end? Will your sales team know that it’s time to get in touch with that customer to talk about renewals and upsells?

• Revenue recognition. Revenue recognition is a tricky area of accounting for any business, but in the recurring model it can become overwhelming. Every contract has the potential to impact revenue, not only in the quarter it occurs, but also for years to come. Small errors that are made as a result of manually re-keying data can turn into gigantic issues in a year-end audit. For an ambitious software entrepreneur with sights set on an IPO, those errors are unacceptable.

• Consulting services. In addition to a growing portfolio of software and subscription models, your company also offers implementation and support. Your consultants have been entering their hours in separate timekeeping software, and your bookkeeper then has to manually enter that time into QuickBooks, along with each consultant’s hourly rate, to generate invoices. As the consulting side of your business grows, this simple task becomes more of a time drag. Instead of going out on the 1^st of the month, invoices are now going out on the 15^th—so you’re getting that cash 15 days later than you would if that process was automated.

Now that you’re ready to upgrade from QuickBooks, what do you look for in a new system? To provide your software company with a platform for profitable growth, look for an integrated business management information system with the following capabilities:

1. Revenue recognition module. Accounting systems that are designed for the software industry automate the revenue recognition process. That means your staff doesn't spend time building spreadsheets and reconciling information. They simply set the contract dates and the revenue recognition schedule, and set the engine to run.

2. Automated billing. The right business management system will allow your staff to set up each customer on a billing schedule so that invoices are generated automatically—eliminating the possibility of missed or late invoices.

3. Renewals management. Imagine if your sales team received an alert 120 days before the end of each contract. They could proactively contact those expiring customers to start priming the pump for a renewal. Or perhaps they can mine that customer’s previous activity to discover what other modules and features your company could offer the customer.

As your software company grows, the costs of maintaining QuickBooks become more significant: time spent building and reconciling spreadsheets, revenue leakage and the potential for costly errors. Upgrading to a more robust, integrated suite of business management applications can position your company for the breakout growth you envision. We can help you discover the right business platform. Contact us or call 888-773-2123 to learn more.

If you found the above content interesting, be sure to watch our video on:

Join us for a webinar on-demand that will show you how to save time by putting systems in place that help you stay ahead of the game. No one wants to come in on nights and weekends to get reports ran and close the books.