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SaaS Accounting Key Metrics: Free Cash Flow

A comprehensive guide and in-depth evaluation of the key SaaS accounting metrics required to understand and optimize a SaaS business. Take a sneak peek!<br><br>

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SaaS Accounting Key Metrics: Free Cash Flow

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  1. Key SaaS Metrics Under SaaS Accounting Basics FREE CASH FLOW

  2. SaaS accounting is basically accounting for cloud-based software or service providers in which these software providers host the application. Accordingly, there is no need for the software to be installed in the local systems of the customers What is SaaS Accounting?

  3. Cash Vs Accrual Method of Accounting Accounting methods are rules that govern the way income and expenses are to be reported into your books of accounts for tax returns.

  4. CASH METHOD ACCRUAL METHOD Under the accrual method of accounting, income and expenses are recorded in the accounting period in which they are earned or incurred. Under cash method accounting, the income is recognized at the time the cash is received for the product or service sold. Likewise, the expenses are recorded at the time they are incurred.

  5. A SaaS business must evaluate its revenue by tracking revenue drivers like bookings, calculated billings, and recurring revenue. Similarly, there are various SaaS key performance indicators that SaaS companies must track for measuring their growth and overall performance. KEY SAAS METRICS AND FINANCIAL REPORTS

  6. Bookings in the case of a SaaS business refer to the sum of all the closed deals in a particular year. In case a SaaS business tracks financials on a monthly basis, then booking refers to the sum of all the closed deals in a given month. Note that Bookings is a contracted value. Thus, it showcases the deals closed with different prices and durations. Bookings

  7. Recurring Revenue Recurring Revenue refers to the amount of revenue that a SaaS business collects over a stated period of time. In SaaS businesses, recurring revenue refers to the revenue generated in the form of the subscription fee for accessing the software as well as cloud-based services. Such services may include upgrades, maintenance, and support offered by the SaaS provider.

  8. Calculated Billings refers to the sum of revenue generated during a period (i.e. a quarter) and the change in the deferred revenue from the prior quarter to the current quarter. Investors track calculated billings rather than revenue as they believe it is a better forward-looking metric with regards to the health of a SaaS business. Calculated Billings

  9. Need Help With Your SAAS Accounting / Tax? Contact us Rightway!

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