QuickBooks doesn’t provide the automation or accuracy SaaS companies need. Learn how a cloud financial management solution like Sage Intacct can help.
QuickBooks is a popular accounting software package for new and small businesses. It delivers basic bookkeeping functionality without breaking the bank.
However, many businesses feel the pain of QuickBooks’s limitations as they grow and their needs become more complex.
This is particularly true for SaaS companies.
Why? Because SaaS companies need robust financial reporting and forecasting to scale and grow—especially when they seek funding or want to go public.
QuickBooks doesn’t provide the automation, detail, and accuracy SaaS companies need. It can’t handle dimensions, recurring revenue, and forecasting. It doesn’t deliver real-time information and metrics at the speed of business for fast, future-shaping decisions.
Here’s a brief look at 10 reasons your SaaS company shouldn’t use QuickBooks.
Bookkeeping, Yes. Accounting, No.
Bookkeeping ensures all financial transactions are properly recorded in the company’s books. That includes recording invoices, receipts, and payments. QuickBooks serves this purpose well.
Accounting focuses on giving decision-makers financial information for data-driven decisions. It involves the interpretation, analysis, and presentation of financial transactions. QuickBooks falls short here.
If your SaaS company wants better, deeper financial insights, consider a financial management solution endorsed by the American Institute of Certified Public Accountants (AIPCA).
If you can automate something, why would you do it manually?
QuickBooks has some automation features, but they may not work the way you expect them to. For example, it doesn’t have a double-entry bookkeeping feature. Because you can’t track expenses and income in two separate accounts, keeping track of your finances and producing accurate financial statements is difficult and time-consuming.
With better automation, you can improve efficiency, accuracy, and consistency while freeing resources for other tasks. Sage Intacct clients report they’ve shifted from being 80% manual to 80% strategic.
QuickBooks doesn’t ‘play nice’ with other applications like Salesforce. It also doesn’t offer subscription billing and can’t do credit memos to existing contracts, so you’re forced to do billing and revenue recognition in spreadsheets.
SaaS companies that rely on Salesforce for customer relationship management (CRM) and use QuickBooks struggle with this lack of integration. They waste time and find mistakes in their data, negatively affecting the bottom line.
When your mission-critical applications are seamlessly integrated, you eliminate the errors from duplicate data entry, boost efficiency, and save money.
No Revenue Recognition Tracking
QuickBooks can’t track revenue recognition. This is a significant gap, as revenue recognition is a key accounting principle. Without proper revenue recognition, a company’s financial statements are inaccurate and could mislead investors and creditors.
There are workarounds—QuickBooks users can manually track revenue recognition in a spreadsheet or different application. Or they can use QuickBooks’s invoicing feature to create an invoice for each revenue-generating transaction. Both options are cumbersome and time-consuming. Neither option is ideal.
The right financial management solution ensures you comply with ASC 606 and IFRS 15 revenue recognition guidelines. It automates complex revenue calculations, accelerates the revenue recognition process, and helps you close the books faster.
Lack of Multi-Entity Tracking
With QuickBooks, each company entity requires a separate instance. The lack of multi-entity tracking can lead to duplicate invoices and payments. And QuickBooks can’t generate consolidated financial statements, making it nearly impossible to get a clear view of your SaaS company’s financial performance.
By switching to a modern financial management solution, your SaaS company can automate financial consolidations, including currency conversions, inter-entity transactions, and local tax reporting.
QuickBooks makes accurate auditing difficult. Its user interface isn’t designed for auditing, and it has no dedicated auditing tools. Users must dump data into spreadsheets and use third-party software to perform audits. This is problematic for SaaS companies seeking funding or wanting to go public. Accurate auditing with generally accepted accounting principles is critical.
A powerful cloud-native financial management solution enables you to establish financial controls that reduce the risk of errors and fraud and ensure accounting records are accurate and reliable.
Working From Home Is a Pipe Dream
QuickBooks Desktop can’t handle remote working situations, which can cause problems with data synchronization, communication, and collaboration.
Again, QuickBooks users have found creative ways to work around these limitations, but they require extra work. For example, you can set up a VPN so your remote employees can connect to the company file, or you can use a third-party service to host your QuickBooks Desktop file online. Another option is QuickBooks Online, but that doesn’t support discount rates by customer, sales tax creation and corrections, and correction of unapplied credits and payments.
If your SaaS company graduates to a cloud financial management solution, your remote workforce can enjoy anytime, anywhere access from any device—without sacrificing functionality.
Closing the Books Takes Forever
With QuickBooks, your close can take at least 10 days. And if your SaaS company has multiple entities, each requires its own set of books. This significantly increases consolidation and close times because QuickBooks is designed for smaller, single-entity organizations. You can’t make fast, confident decisions if it takes weeks to assemble, present, and analyze data.
A cloud-native solution like Sage Intacct automates financial consolidation activities, eliminates manual effort, and lets you close the books up to 70% faster.
Financial forecasting in QuickBooks is hard because its basic reports don’t provide detailed information about future trends.
Enter workarounds—again. You can use third-party software that integrates with QuickBooks and delivers stronger financial reporting capabilities. Or you can export your QuickBooks data into Excel, manipulate it, and try to understand future trends.
Or you can predict your SaaS company’s future with the right technology. Sage Intacct delivers integrated CRM, configure, price, and quote (CPQ), and financials so you can automatically generate forecasts. You get one view of your customers (vs. disparate orders) across billing, revenue recognition, and cash. You pivot from manually reporting the past in time-consuming spreadsheets to real-time forecasts.
The Dreaded Spreadsheets—Again
We may sound like a broken record, but we can’t overstate QuickBooks users’ dependency on spreadsheets.
SaaS companies that rely on spreadsheets as workarounds face security risks, sacrifice data quality, can’t easily share information, and lose hours of valuable time.
If you switch to Sage Intacct, you can ditch the spreadsheets for good.
While financial data is critical for every organization, it’s especially critical for SaaS companies. Without the proper financial data, SaaS finance leaders can’t make informed decisions about growth.
Download our free eBook, 10 Reasons SaaS Companies Should Not Use QuickBooks, to dive deeper into each point above. You’ll understand why your SaaS company’s future should be in the cloud with Sage Intacct.