Automating Your Subscription Business: How ERP for software and subscription companies are winning on 3 key metrics
It seems everything is now available as a subscription. And the Anything/Everything-as-a-Service (XaaS) model is no longer limited to software and streaming media services. You can now subscribe to pickles or psychotherapy as easily as you can to movies and music. The pandemic only served to accelerate the subscription economy, prompting many businesses to rapidly transition their business models in all or part to a subscription model.
However, with the shift comes accounting challenges and complexities that QuickBooks or legacy ERPs are ill-equipped to handle. To ensure predictable recurring revenue and ongoing success, companies like yours are moving to modern, cloud-based ERP software designed for the software and subscription industries – and the move is paying off in three major ways: shortening the quote-to-cash cycle, accelerating the monthly close, and improving cash flow. We highlight those results here, and to read more about how ERP for software companies helps businesses achieve these benchmarks, download this whitepaper from Sage Intacct: Finance’s guide to automating your subscription business: The 5 key steps to ensuring predictable revenue.
1. Cut quote-to-cash cycle time
The quote-to-cash cycle time is a key performance metric for subscription and software companies, yet for many it can be difficult to track. In many organizations, the quote process is completely separate and siloed from the realization of revenue tasks. That disconnect leads to inefficient sales cycles, manual data entry, and even under-billing.
JobVite, a software company providing applicant tracking and recruiting software, decreased its quote-to-cash time by 30% after switching to Sage Intacct, an ERP designed for software and subscription businesses.
2. Accelerate monthly close
Faster monthly closes mean the finance team has access to actionable data more quickly —no more managing by looking in the rearview mirror. Quicker, more agile decision-making allows businesses to focus on growth and customer experience initiatives that further contribute to the bottom line.
Verimatrix, a software company publishing content security applications, slashed its monthly close time from 21 days to just 5 using Sage Intacct’s ERP software designed for software companies. The company is able to make smarter decisions quicker than before, a benefit that led to an additional $3 million in EBITDA.
3. Improve cash flow
Without ERP software designed for the software industry, companies often rely on spreadsheets to manage complex billing structures, forecast revenue, and accurately calculate recurring revenue to meet industry regulations. Spreadsheets are time-consuming to maintain, often contain errors, and simply aren’t scalable.
Verimatrix, the company we referenced above, increased its operating cash flow by $10 million, reduced days that sales were outstanding from 120 days to 65, and grew its customer count by 40% after switching to Sage Intacct ERP for software companies.
Ready to grow, scale, and succeed
Software and subscription companies have complex accounting requirements that require a purpose-built ERP solution. Sage Intacct is an exceptional ERP solution for software businesses – designed from the inside-out to address the complexities of subscription accounting. In this article, we’ve highlighted some of the benefits Sage Intacct customers are enjoying. To learn more, we invite you to view this whitepaper: Finance’s guide to automating your subscription business: The 5 key steps to ensuring predictable revenue.