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SaaS bookkeeping

SaaS bookkeeping separates billings, collections, recognized subscription revenue, processor activity, deferred amounts, payroll, and cash runway.

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CLOSE FILE · ILLUSTRATIVE USD EXAMPLE

One annual subscription, three different numbers

CASH ON JANUARY 1$12,000

Annual subscription paid upfront

JANUARY REVENUE$1,000

One month of a uniform 12-month service

JANUARY 31 LIABILITY$11,000

Service still owed to the customer

Deferred-revenue rollforward

$0 opening + $12,000 billings − $1,000 recognized = $11,000 closing.

This simplified accrual contract starts January 1, has one uniformly delivered service, and has no tax, discount, refund or implementation component. Actual recognition depends on contract obligations and the applicable accounting policy.

A dashboard’s annual recurring revenue is a separate operating metric. It is not a substitute for either recognized revenue or bank cash. Tie the billing export to the liability schedule before using growth charts.

Model the cash timing separately →

What the monthly close has to prove

  • Reconcile subscription billings and processor settlements.
  • Separate collected cash from recognized revenue where accrual reporting applies.
  • Track annual prepayments, refunds, credits, and chargebacks.
  • Review payroll, contractor, hosting, and software costs against runway.

Documents to collect

  • Billing-platform exports
  • Processor settlement reports
  • Bank and card statements
  • Payroll registers
  • Customer credit and refund reports
  • Contracts supporting material annual prepayments

Common failure points

  • Annual cash collections treated as one month's revenue
  • Processor deposits recorded net
  • Founder funding recorded as sales
  • Hosting and direct service costs classified inconsistently
  • Refund liabilities omitted

Example

A customer may pay $12,000 for a year in advance. Cash arrives immediately, while accrual revenue may be recognized over the service period.

Sources

Keep learning

Accrual basis accountingAccrual basis accounting generally records income when earned and expenses when incurred.RevenueRevenue is income earned from a business's ordinary activities before subtracting expenses.Cash receivedCash received is money deposited or otherwise collected, regardless of whether it is current-period revenue.Cash flow statementA cash flow statement explains changes in cash from operating, investing, and financing activities.Gross profitGross profit is revenue minus the direct cost of producing the goods or services sold.

Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.