Outsourced Accounting and Finance for SaaS Companies
Scaling a SaaS business brings unique financial challenges, including subscription revenue tracking, ASC 606 compliance, cash-flow management, and preparing investor-ready reports. However, building an in-house finance team that understands the SaaS model can be expensive and time-consuming.
Outsourced accounting and finance services offer a smarter alternative by providing the expertise and scalability SaaS companies need at every stage from startup to IPO and beyond, without the overhead of an in-house team.
Introduction
Introduction
For many businesses, the challenge of keeping up with the intricacies of financial management, from regulatory compliance to strategic financial planning, can divert valuable resources away from their core objectives. This is where the concept of outsourced accounting and finance comes into play, offering a solution that not only alleviates the burden of day-to-day financial tasks but also empowers businesses to focus on growth and innovation. Whether you’re exploring the benefits of partnering with external financial experts for the first time or considering a fractional approach to enhance your strategic capabilities, understanding the scope, benefits, and dynamics of outsourced accounting and finance is essential.
The competitive landscape for CPA firms is demanding. You need to offer a wider range of services, cater to complex client needs, and navigate staffing challenges. According to a survey by alliantTalent, 74% of CPA firms are introducing fully remote roles, and 79% are using technology for basic tasks.
What is outsourced accounting and finance for SaaS businesses?
Outsourced, or fractional, accounting and finance allows SaaS businesses to delegate financial tasks, from daily bookkeeping to advanced financial planning and compliance with accounting standards like ASC 606 and GAAP to experienced third-party accounting professionals.
SaaS companies can outsource tasks, including subscription revenue recognition, deferred revenue tracking, SaaS-specific metrics ( e.g., MRR, ARR, CAC, and LTV), financial forecasting, and tax compliance across multiple states or countries. This ensures accurate financial data for investors and improved compliance and strategic financial guidance that allows your leadership team to focus on product innovation and business growth.
What are the benefits of using outsourced or fractional accounting and finance for SaaS businesses?
Growing a SaaS business requires a strong financial foundation that helps you keep pace with rapid growth and complex revenue models. Here’s how outsourcing can help:
Cost Efficiency: Save on the costs of recruiting, training, and maintaining an in-house finance team while still getting the support of experienced SaaS finance professionals when you need them.
Access to SaaS-Specific Expertise: Work with professionals who are experts in SaaS-specific accounting, including ASC 606 revenue recognition, deferred revenue tracking, multi-entity consolidation, tax strategies, and SEC compliance. Outsourced firms also manage their internal training, ensuring their professionals are consistently updated with the latest relevant accounting standards and regulations.
Investor-Ready Financials: SaaS startups and growth-stage companies need accurate, transparent financial reporting. Your outsourced team ensures your books are audit-ready and align with VC, private equity, and M&A expectations.
Regulatory and Tax Compliance: SaaS businesses often have to deal with multi-state and international taxation rules, recurring revenue complexities, and industry-specific GAAP requirements. Outsourcing to a team that knows this world inside out helps you optimize your tax strategy and ensures reporting follows compliance standards.
Scalability: Outsourcing means you can call on the expert help you need when you need it. Whether you’re a startup, preparing for Series A, or at the stage of planning your IPO, an outsourced finance team can scale with your needs—offering CFO-level strategy, financial planning, and transaction advisory support.
Tech Integration: Outsourced accountancy firms stay current on the latest financial tools and technology. An outsourced partner can work with your existing technology, including Stripe, QuickBooks Online, NetSuite, and subscription management tools, or help you seamlessly integrate new tools into your tech stack.
Security and Compliance: Protecting sensitive data is vital, and SaaS companies must meet enterprise-level security standards, including SOC 2 compliance. Your outsourced accounting teams will keep you on track with best practices for SOC 2 compliance, data encryption, and risk management.
What does an outsourced or fractional accounting and finance department look like for a SaaS business?
An outsourced team acts either as an extension or replacement of your internal finance department, providing SaaS-specific financial expertise on an as-needed basis. It typically includes:
- Financial Accounting and Bookkeeping Teams: Handling daily financial transactions, subscription billing reconciliation, revenue tracking, expense categorization, and financial close processes to maintain accurate SaaS metrics (MRR, ARR, CAC, LTV, churn).
- Controllers: Overseeing revenue recognition under ASC 606, deferred revenue management, financial reporting, GAAP compliance, and internal controls to ensure audit readiness.
- Tax Specialists: Managing SaaS-specific tax complexities, including R&D tax credits, multi-state and international sales tax compliance (Wayfair ruling considerations), and transfer pricing for global operations.
- Audit and Compliance Experts: Preparing financials for investor due diligence, ensuring SOC 2 compliance, and aligning reporting with VC and private equity expectations.
- Technical Accounting Support: Providing expertise and assistance with complex accounting requirements such as Revenue Recognition under ASC 606, and Commissions Capitalization and Amortization. This includes support to execute or establish the process or improve the accounting process from data gathering, calculation, posting, and preparation of supporting schedules.
- Finance Transformation or Business Review: Analyzing existing financial processes, documenting the current state, identifying gaps and inefficiencies, designing the future state processes, and documenting the optimized future state for improved efficiency and control.
- Fractional CFO-Level Guidance: Strategic financial planning, SaaS pricing model optimization, fundraising support, cash flow forecasting, and investor relations tailored to the needs of subscription-based businesses.
How do SaaS businesses choose the right outsourced services or fractional teams?
Not all accounting firms understand the unique challenges of SaaS businesses. Here’s what to look for:
- SaaS-Specific Expertise: Choose a firm with proven experience in subscription-based revenue recognition, GAAP compliance, global tax considerations for SaaS firms operating across multiple jurisdictions, and SaaS financial metrics like MRR, ARR, LTV, CAC, churn, and burn rate.
- Scalability: Ensure your partner can scale their services to support you through key growth stages from startup through Series A, venture-backed growth, and IPO readiness, including financial modeling for different funding scenarios.
- Tech Stack Compatibility: Confirm your outsourced providers are familiar with SaaS financial tools like QuickBooks Online, NetSuite, Chargebee, Stripe, SaaSOptics, and enterprise-level billing platforms to streamline financial operations.
- Security and Data Protection: Verify that the firm follows SOC 2 compliance, robust encryption, role-based access controls, and best practices for safeguarding financial data in cloud-based environments.
- Proven Track Record: Look for testimonials, resources, and case studies that show a track record of working with SaaS businesses like yours.
What are some best practices for onboarding an outsourced accounting, finance, and audit partner?
A smooth onboarding process sets the tone for a successful partnership. Here are some steps to get started:
- Set Clear Expectations: As early as possible, define the scope of work, timelines for reporting, and your communication preferences. Ensure your outsourced team understands your priorities so that they can align their work with what matters to you, from investor expectations and board requirements to regulatory compliance (e.g., ASC 606). Establish KPIs such as cash burn rate, runway projections, and gross margin to monitor performance and the firm's financial health.
- Provide Secure Access and Share Information: Provide controlled access to your essential financial platforms, including Xero, QuickBooks Online, NetSuite, Oracle, Chargebee, Stripe, SaaSOptics, or any billing and subscription management tools you use. Share historical financial data, revenue recognition processes, and workflows for customer billing, refunds, and multi-entity consolidation.
- Build Relationships: Introduce your outsourced finance partners to key internal stakeholders, such as department heads responsible for sales, customer success, and operations, so everyone knows who to contact for MRR and ARR reporting, investor updates, or tax-related questions. Strong relationships help streamline communication and improve your decision-making.
- Set the Team Up For Success: Make sure everyone is clear about roles and responsibilities. Define workflows for financial processes like revenue recognition adjustments, deferred revenue reconciliations, and tax compliance for multi-state or international SaaS sales. It's a good idea to create a communication calendar for your regular financial reviews and updates.
What are Some Best Practices for Working with Outsourced Accounting and Finance Teams in SaaS?
Working effectively with an outsourced or fractional accounting team requires clear communication, well-defined processes, and a strong partnership. After onboarding, follow these best practices to maximize their impact:
- Maintain Clear Documentation: Keep key financial documents organized and easily accessible, including contracts, ASC 606 revenue recognition policies, subscription pricing structures, and multi-state or international sales tax compliance guidelines. Document workflows for critical tasks like deferred revenue reconciliations, subscription billing adjustments, and churn analysis to ensure consistency.
- Prioritize Transparency and Proactive Communication: Open and regular communication builds trust and keeps you informed about your company’s financial health. Don’t hesitate to ask questions about revenue fluctuations, customer billing discrepancies, payment processor fees, or tax obligations for global SaaS operations. A strong outsourced team will happily explain their processes and provide clear financial reporting and strategic recommendations.
Ensure Timely Response and Support: Establish clear expectations for response times from your outsourced team and ensure your internal team provides timely responses to any clarifications or supporting documentation requests from the outsourced team. Prompt communication on both sides is crucial for the outsourced team to accurately categorize transactions and prepare necessary reports, ensuring compliance with internal and external reporting requirements like board reporting, audit, tax, or investor deadlines. - Have a Contingency Plan: Unexpected challenges, such as regulatory changes or rapid growth, can impact financial operations. Ensure your outsourced team has documented workflows for crucial processes like tax filings, investor reporting, and payroll. Identify backup contacts for urgent financial matters, such as funding round due diligence or audit requests.
- Leverage Their SaaS Expertise: Make use of your outsourced team’s deep industry knowledge. A skilled outsourced finance team can advise on SaaS-specific challenges such as optimizing pricing models, reducing customer acquisition costs (CAC), improving cash flow forecasting, managing burn rate, and preparing for funding rounds or IPOs.
- Track Performance: Monitor the effectiveness of your outsourced team using KPIs that matter to your business, such as revenue retention rates, MRR and ARR growth, CAC-to-LTV ratio, cash runway, and deferred revenue tracking accuracy. Regular performance reviews help ensure alignment with your financial goals.
- Build a Strategic Partnership: Treat your outsourced team as an extension of your leadership, not just a vendor. Keep them informed about upcoming product launches, pricing changes, or expansion plans so they can provide financial insights that support growth. Whether you’re entering new markets, adjusting your subscription tiers, or preparing for an acquisition, a strong outsourced team can help navigate financial complexities.
How Does A Saas Business Measure the Success of a Partnership With an Outsourced Accounting, Finance, and Audit Team?
A strong outsourced accounting partnership delivers measurable results. To evaluate the effectiveness of your outsourced accounting, finance, or audit team, track these key factors:
Cost Savings and Efficiency Gains
- Has outsourcing reduced the overhead costs of hiring and training an internal finance team?
- Have financial workflows (e.g., subscription billing reconciliation, accounts payable, or tax filings) become more automated and efficient?
- Has the outsourced team provided cost-saving strategies, such as optimizing SaaS pricing models, reducing payment processor fees, or improving working capital management?
Performance Against SaaS-Specific KPIs
- Are key financial metrics improving, such as the CAC-to-LTV ratio, gross margin, customer retention, or net revenue retention (NRR)?
- Have you seen measurable ROI from outsourcing, such as better cash flow visibility, increased profitability, or faster financial close processes?
- Is your outsourced team enabling better long-term financial planning and scalability for your SaaS business?
Compliance and Risk Management
- Is your business fully compliant with ASC 606, GAAP, multi-state sales tax nexus laws, and international VAT requirements?
- Have you reduced the risk of financial misstatements, investor scrutiny, or regulatory fines through improved audit readiness?
- Does the outsourced team proactively manage risks like revenue leakage, customer payment fraud, or foreign currency fluctuations?
Strategic Financial Insights and Decision-Making
- Has the outsourced team provided financial insights that help refine pricing models (e.g., usage-based pricing vs. tiered subscriptions)?
- Are you receiving accurate cash flow forecasts to optimize runway and plan for future fundraising rounds?
- Has their guidance supported major milestones such as a Series A/B raise, international expansion, or IPO readiness?
Client Satisfaction and Communication
- Is there clear and responsive communication between your internal team and outsourced finance professionals?
- Does your outsourced team regularly provide financial insights and strategic recommendations tailored to SaaS growth challenges?
- Has collaboration improved financial operations, ensuring better alignment with investor expectations and board reporting?
How Scrubbed Can Help
At Scrubbed, we help SaaS businesses navigate financial complexities, from cost forecasting to revenue recognition. Our team specializes in optimizing financial operations so that you can focus on growing your business.