RSMUS.comThe SaaS landscape has never been more crowded or competitive than now. That brings up an essential question—what drives success at a SaaS company?
Great products, strong marketing, and stellar client services certainly help. But the SaaS economy has enough history by now to suggest that the strongest vendors have something more mundane in common: they keep operating expenses in check.
It’s easy for these costs to balloon without realizing how much they’re cutting into profits and compromising a strong financial standing. Alternatively, SaaS companies that effectively manage their costs look more attractive to investors and customers alike. Healthy companies, across all industries but especially SaaS, know how to stick to a budget.
How do SaaS companies track expenses?
There are many compelling reasons (or mandates) for SaaS companies to track their operating expenses and keep them below acceptable thresholds. But that hasn’t always been easy, unfortunately.
A traditional chart of accounts requires accountants to create complex codes to identify each expense at each department. It’s far from intuitive, the number of codes can quickly become overwhelming, and errors are common even under the best circumstances. Tracking where money is going is an imperfect process to say the least.
As a result, operating expenses often deviate, sometimes significantly, from what the chart of accounts suggests. That disparity has caused turbulence at many SaaS companies and even failure in some instances, so it’s a problem in obvious need of a solution.
The solution has arrived in the form of Sage Intacct Dimensions.
Financial Visibility Like Never Before
The Sage Intacct financial management platform uses “Dimensions” rather than codes to identify transactions in the chart of accounts. Dimensions are tags such as location, project, customer, vendor, or employee that categorize the transaction, similar to how accounting codes work but with more detail and less confusion.
The Department Dimension is particularly useful for tracking operating expenses. Accountants can tag an expense with a particular department (eg. a travel expense for the sales department) instead of creating different expense codes for each department. Likewise, they can specify which expenses can be associated with which departments (eg. only the sales department can log travel expenses) to improve financial controls through dimensional relationships.
It couldn’t be easier to tag an expense with the proper Department Dimension, but the real advantages come afterward. Accountants can easily create expense reports for each department by filtering for a particular Dimension. Or they can compare and analyze operating expenses across departments or in relation to other costs since Dimensions (along with Sage Intacct’s streamlined reporting capabilities) make it so simple to explore and analyze financial data.
The ability to slice and dice operating expenses will lead to drastic reductions in the time and manual effort it takes to track every expense across all departments. More significantly, Dimensions make operating expenses visible, predictable, and manageable to a greater extent than ever.
Turning Operating Expenses Into Excellence
Sage Intacct doesn’t guarantee SaaS success. However, optimizing expense management and so many other aspects of accounting and finance improves the odds significantly.
SaaS companies that excel at managing operating expenses have the means to minimize those expenses without, in the process, causing unintended disruptions by under-funding their efforts. Those same skills become especially important as SaaS companies scale and need to spend more inside each department (or across more departments) without letting expenses get out of control. Dimensions make it easy to assess where operational expenses need to be, and just as easy to track whether spending remains at acceptable levels. When it deviates, decision-makers also have clear indicators of where, when, why, and by how much.
To get a demonstration of what Dimensions can do, get in touch with our Sage Intacct team, with combined expertise in tech, accounting, and SaaS.
