SaaS companies need financial reporting and forecasting to expand and scale, especially as they look for funding or seek to take the company public. There is efficient and effective software out there that provides what SaaS companies need to grow, and QuickBooks is not one of them. QuickBooks simply cannot offer the same level of detail and accuracy needed, with dimensions, recurring revenue and forecasting. Here are 10 reasons SaaS companies should avoid QuickBooks.
QuickBooks isn’t Designed for Accountants
QuickBooks is a nice bookkeeping tool for small businesses, but it isn’t designed for accountants. While both bookkeeping and accounting are vital to any business, they serve different purposes. Knowing when to use each one will help you keep your finances in order and make better decisions for your business. If all you need is bookkeeping, stay the course with QuickBooks. If you want better insights, then use a financial-management platform that’s endorsed by the American Institute of Certified Public Accountants.
QuickBooks Automation is Limited
QuickBooks relies heavily on manual processes. This can be frustrating for SaaS businesses accustomed to using software that automates tasks. Although QuickBooks does have some automation features, they are often limited and may not work the way you expect them to. For example, QuickBooks doesn’t have a double-entry bookkeeping feature. This means that you can’t track your expenses and income in two separate accounts. If you’re looking for an accounting software that will automate most of your bookkeeping tasks, QuickBooks is probably not the right fit for your business.
QuickBooks Doesn’t Integrate Well
QuickBooks doesn’t integrate well with other software applications such as Salesforce. It doesn’t have a native integration to Salesforce, doesn’t have subscription billing, and can’t do credit memos to existing contracts, leaving you to do billing and revenue recognition in spreadsheets.
This can be a big problem for SaaS companies that rely on Salesforce for their customer relationship management and use QuickBooks. The lack of integration can lead to inefficiencies and errors in your data, which will impact your bottom line. As well, application integration provides a competitive advantage by giving employees access to data and information that would otherwise be unavailable. When applications are integrated, an organization can make better use of customer data, market research and other types of information. This access to data and information can give an organization a leg up on the competition.
QuickBooks is Unable to Track Revenue Recognition
SaaS companies use a variety of reports to track their financial performance. Two of the most important types of reports for accountants and chief financial officers are balance sheets and income statements. Balance sheets provide a snapshot of a company’s assets, liabilities and equity at a given point in time. This information helps assess solvency and financial risk. Income statements, on the other hand, show how much revenue a company has generated and how much it has spent over a period to assess profitability and identify trends. Together, these reports provide critical insights into a company’s financial health.
QuickBooks is unable to track revenue recognition. This is a major gap, as revenue recognition is a key accounting principle. Without proper revenue recognition, a company’s financial statements will be inaccurate and could mislead investors and creditors. The lack of proper revenue recognition tracking in QuickBooks is a serious miss that could have devastating consequences for a business. Investors and creditors rely on financial statements to make informed decisions, and if those statements are inaccurate, it could lead to disastrous results.
QuickBooks is Unable to Track Multiple Entities
Using QuickBooks, each company entity requires a separate instance. It’s a challenge for software companies and SaaS companies. The lack of tracking can lead to duplicate invoices and payments. QuickBooks also lacks key features that are essential for businesses with multiple entities. For example, it does not have the ability to generate consolidated financial statements. This can make it difficult to get a clear overview of your business’s financial performance.
To avoid these issues, it’s important to have a system in place that can track all your entities separately. This will help ensure that you don’t run into any problems with duplicate invoices or payments, and all assets are accurately managed.
QuickBooks Lacks Financial Controls
Financial controls are important in any organization, but they are especially critical for SaaS organizations. By putting financial controls in place, companies reduce the risk of errors and fraud, and ensure that their accounting records are accurate and dependable.
QuickBooks makes accurate auditing difficult. The user interface isn’t designed for auditing and there are no dedicated auditing tools. Users must export data to Excel spreadsheets and use third-party software to perform audits. This makes the process time-consuming and error prone. This is problematic for any SaaS company looking for funding or desiring to go public. Accurate auditing, using generally accepted accounting principles, is essential.
QuickBooks Doesn’t Enable Remote Work
QuickBooks Desktop has limited remote working capabilities. It’s not built to be used by employees who are working remotely. QuickBooks was designed to be used by employees who are in the same office as the company file.
This can pose problems for companies who have employees who work remotely, or who travel frequently. QuickBooks Desktop is not built to handle remote working situations, and this can lead to problems with data synchronization, communication, and collaboration.
It Takes Longer to Close the Books Using QuickBooks
The most significant disadvantage of a lengthy financial close process is the likelihood of errors and omissions. When data must be manually entered into multiple systems, the chances of human error increase exponentially. This can result in inaccurate financial reports and ultimately, costly mistakes.
Another downside to a lengthy close is the amount of time it takes away from other important tasks. The finance team is usually bogged down during closing, which means they’re not able to focus on strategic initiatives that could improve the business. This can have a long-term negative impact on growth and profitability.
QuickBooks Makes Forecasting Difficult
It’s hard to do financial forecasting using QuickBooks. This is because QuickBooks only offers basic reports that don’t provide a lot of information on future trends.
There are some paths to get around this difficulty. One way is to use third-party software that integrates with QuickBooks and provides more robust financial reporting capabilities. Another way is to export data from QuickBooks into a spreadsheet application like Microsoft Excel, where you can then manipulate the data to better understand future trends.
That said, QuickBooks still lacks the data you need to make strategic business decisions.
QuickBooks Users Depend on Spreadsheets
As I’ve pointed out, QuickBooks users are overly dependent on spreadsheets to get the data they need to make better decisions. Like other firms, SaaS companies face a host of issues when relying on spreadsheets, including security risks, data quality, limited functionality and so much more.
The bottom line is that QuickBooks’ dependency on spreadsheets makes it unreliable at best.
For more on this, download our eBook on the 10 reasons SaaS companies shouldn’t use QuickBooks and learn more on how to identify the best accounting solution for your SaaS business.
Recommended Next Read
Six Common Reasons to Change Fund Accounting Software