Using NetSuite ERP, Software-as-a-Service (SaaS), companies can mitigate risk, efficiently manage operations, increase revenue and profitability, easily access many key financial SaaS metricsc, and satisfy investors with predictable growth.
Whether you’re switching ERP systems or prepping for implementation, NetSuite stands above the rest as the most powerful platform built to scale with SaaS companies.
Growth Challenges for SaaS Businesses
The SaaS industry continues to boom. By 2030, the software as a service market is projected to achieve a market size of $819.23 billion, having grown at a compound annual growth rate of 13.7% between 2023 and 2030.
With this remarkable growth happening now and on the horizon, SaaS companies are faced with challenges, including:
- Reporting KPIs to Investors: SaaS companies must deliver stakeholders accurate and timely financials and growth metrics.
- Manual Subscription Billing Systems: As the customer base grows, SaaS companies must ensure their systems can handle higher traffic, especially with subscription billing.
- Pricing Models and Profitability: Businesses must balance competitive pricing to attract customers while generating sufficient revenue.
- Customer Support and Satisfaction: Ensuring customer satisfaction and preventing churn are crucial for long-term success.
Using NetSuite ERP as a Solution to Scale for SaaS Companies
With an expert NetSuite implementation partner, let’s examine each challenge and uncover how Oracle NetSuite ERP can help your SaaS business scale.
1. Robust Financial Reporting
To determine the health and outlook of their investments in SaaS companies, investors demand actionable and accurate reports.
Thankfully, NetSuite ERP runs the gamut when it comes to generating financial statements. It offers customizable financial reports, such as profit and loss statements, balance sheets, cash flow statements, and more. These reports can be tailored to suit the specific needs of SaaS companies, allowing them to track and analyze key financial metrics, such as revenue, expenses, profitability, and subscription metrics.
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With real-time visibility into financial data, SaaS companies have access to up-to-date information empowers leadership to make data-driven decisions, react quickly to market changes, and maintain accurate financial records. NetSuite ERP eliminates the need for manual data entry and reduces the risk of errors associated with outdated information.
Plus, NetSuite ERP allows SaaS companies to configure a chart of accounts that aligns with their unique business requirements. This flexibility is crucial for SaaS companies as they often have specific revenue recognition rules, subscription billing models, and expense categorizations. With NetSuite ERP, SaaS companies can define accounts and sub-accounts that accurately reflect their revenue streams, expenses, and cost centers.
2. Advanced Revenue Management
NetSuite’s Advanced Revenue Management (ARM) employs a suite of features that streamline the revenue recognition process and ensure compliance with accounting standards. This is paramount in helping your SaaS company to reduce accounting costs, improve decision-making, and accelerate financial close.
The NetSuite ARM module allows businesses to:
- Automate Revenue Recognition: Automate the calculation and recognition of revenue based on predefined rules and schedules. Consider factors like contract terms, delivery milestones, and revenue recognition criteria to calculate revenue amounts accurately.
- Comply with Accounting Standards: The module helps businesses ensure compliance with accounting standards such as ASC 606 and IFRS 15. It provides the necessary tools and functionalities to recognize revenue properly based on the guidelines outlined in these standards.
- Handle Complex Revenue Scenarios: NetSuite ARM can handle complex revenue scenarios, such as multi-element arrangements, subscription-based revenue, usage-based revenue, and revenue with contingent factors. It allows businesses to set up specific rules and calculations for each scenario.
- Automate Revenue Allocation: The module automates revenue allocation to different products, services, and performance obligations within a contract. It enables businesses to allocate revenue based on relative fair values or standalone selling prices, ensuring accurate and appropriate revenue distribution.
- Generate Revenue Reports: NetSuite ARM provides comprehensive reporting capabilities to generate revenue-related reports. Businesses can easily view and analyze revenue data, track revenue performance, and generate financial statements that comply with accounting standards.
3. Automated Subscription Billing
One of the biggest pain points is taking a contract document and manually transcribing the agreement's details into an invoice.
StratusGreen’s Paper Street Agreements houses a single place where you can store contract data and use the same date to build an invoice automatically. Agreements will support any contract your sales team dreams up without the significant operational support required today. CFOs and controllers no longer need to manually type in the invoices saving hours of labor time and costs.
As a plug-and-play tool, Agreements simplifies the subscription billing process natively in your NetSuite software. It uses NetSuite data to automate subscription billing, upsells, downsells, and churn. Plus, it supports usage-based billing (also known as consumption-based billing).
4. Flexible Pricing Models
With automated billing for any agreement, Agreements arms you with the tools to hit your key performance indicators (KPIs) and meet your targets. Sell your product in any pricing structure you envision, including:
- Tiered Rates per Tier
- Tiered Rates
- Max Rate
- Flat Rates
- Blended rates
- Any Combination with Minimum
- Amount Thresholds as an Option
- Total Agreement with Minimum
- Amount Thresholds as an Option
Agreements boasts multi-subsidiary options, flexible frequency options, and merge and cancellation functionality with required cancellation reasons. By requiring a cancellation, leadership can use data to determine why customers are falling off and make decisions based on timely churn metrics.
Want to see Agreements in action? Book a demo of this powerful add-on.
5. Integrations
The power of NetSuite lies in its ability to connect with fundamental systems you have in place. Anything (including your homegrown legacy system with an API) can be connected to standard NetSuite records.
This means you can flow data in and out of NetSuite from other software while utilizing NetSuite as your one source of truth across your operational systems. In addition, many of NetSuite’s add-ons, like the Agreements tool and HubSpot Connector, also harness APIs, so a member of your development team can work with a consulting team to seamlessly integrate data. If you need end-to-end development support, we can help with that too.
Scale Smarter with NetSuite
NetSuite ERP has proven itself to be one of the most dependable and scalable software platforms. With a smart implementation, curated selection of modules, and customized integration, SaaS businesses can scale faster and more efficiently, and spend more time on what's really important — delivering maximum value to your customers and keeping investors happy.
Book a call with the StratusGreen team to learn how to take advantage of NetSuite ERP.
