When SAAS businesses need to move on from entry-level software

The short version

• Entry-level software like Xero and Sage 50 can process transactions and produce basic reports but it can't automate revenue recognition, prepayments or tailored reporting.
• SaaS businesses that stick with entry-level systems end up doing that extra work manually in spreadsheets or via third-party add-ons.
• The big cost of staying on entry-level software is the manual time it takes.
• iplicit cut one finance team's month-end close from 10 days to five, and case studies show reductions of up to two-thirds elsewhere.
• The longer a growing SaaS business waits to switch, the more manual work it accumulates every month.

Andy Jackson has spent years watching finance teams outgrow the systems they started on – then made the same call himself.

Andy Jackson has watched a lot of finance teams outgrow their accounting software. Now VP Finance at iplicit, he spent years working in SaaS businesses that started on entry-level tools such as Quicken, Sage 50 and Xero, then hit a wall as the business scaled.

Entry-level systems handle basic transactions and simple reports well. What they cannot do is automate the complex work SaaS finance teams face every month, including deferred revenue recognition, prepayments and more sophisticated reporting. The tasks get done with spreadsheets, manual journals and third-party add-ons, but the workload grows every month.

In this article, Andy explains how he decided to move on from entry-level software, what changed once he did, and how to work out whether your finance team is due the same conversation.

 Andy Jackson, VP Finance, iplicit

What is entry-level accounting software?

Quicken was the first finance system I used, and it still does the job for some sole traders.

I've worked in a succession of SaaS businesses and other growing companies. I left Quicken behind for Sage 50, but it wasn't able to adapt when the world moved to home and hybrid working. Logging into Sage 50 remotely could take about ten minutes, and everything after that took longer than normal, so it wasn't a viable option unless you were in the office.

I later moved several finance teams onto Xero, the small business's favourite for a reason. But an entry-level product doesn't have what a SaaS business needs once it starts to grow. It handles transactions smoothly and produces a basic set of reports, but it won't tailor reporting to your requirements and it can't automate complex tasks like revenue recognition, which are a core part of a SaaS company's work. And the more data that ends up in spreadsheets, the more vulnerable that data is to errors.

Where entry-level software falls short for SaaS businesses

Entry-level systems like Xero cannot automate deferred revenue recognition, a core part of SaaS accounting, so finance teams end up calculating it by hand in spreadsheets every month. Xero also has no native accounts payable automation, so many SaaS businesses bolt on third-party tools such as AutoEntry just to keep pace with invoice volume.

I remember with Xero there was no option to take a sales invoice and tell the system to recognise the revenue over 12 months. You had to go through each sales invoice individually and, using Excel, calculate the deferred revenue, then create manual journals each month to recognise it.

It's the same story with disconnected tools generally. I used to work with about six tabs open, including GoCardless for recurring billing and a CRM that didn't feed directly into Xero, so invoices had to be imported via a CSV file. Looking back, it was mad to have all those extras running alongside the core system.

Is it time to move on from entry-level accounting software?

Start by counting the manual hours, not just the subscription price. If your finance team is regularly working evenings in spreadsheets, paying for third-party add-ons, or juggling several disconnected tools, the entry-level system is already costing you more than a subscription to something built for the job.

SaaS businesses often start with entry-level accounting systems like Xero, but they tend to stick with them even when the software holds them back. Finance leaders end up spending evenings in Excel or connecting costly third-party apps, risking their entire app stack. I was one of them.

It's tempting to focus on price rather than value in that situation. You assume the gap between entry-level and a more capable system is too big for you at that stage of the business's growth. Looking back, I could have saved a lot of time if I'd had finance software like iplicit sooner.

To properly assess the case for changing, start by working out whether your existing software is costing you a lot more than the monthly subscription, once you count the manual hours it takes to work around it.

Where iplicit fits

Finance software built for scaling SaaS businesses automates the work entry-level tools leave to spreadsheets: revenue recognition, prepayments, accounts payable and consolidated reporting. iplicit was designed around that gap, and as a SaaS business itself, it uses its own platform to manage the same complexity its customers face. See how iplicit supports SaaS and tech businesses.

Automating AP, revenue recognition and prepayments

I hadn't used iplicit until I worked for iplicit – and it was an eye-opener. Like most SaaS businesses, we handle a large volume of deferred income revenue recognition and prepayments, work that many finance teams still push out to third-party applications or Excel because their core system can't handle it.

At iplicit, accounts payable would take forever without automation. But thanks to built-in AI invoice processing and machine learning, it's done directly in the finance system, no third-party tool required. SEP2's finance team saw the same shift: deferred income that used to take two to three days a month to work through manually now takes zero.

For revenue recognition, you enter the profile at the point of raising the sales invoice, and everything flows through the system automatically from there. Prepayments work the same way: mark the purchase invoice as a prepayment, select the profile, and it's posted and released into the correct months automatically.

We accountants will always want to tinker with data in spreadsheets too, and iplicit allows for that. You can send data into Excel and manipulate it however you want, or run a query directly in Excel that pulls the data and refreshes easily, so you're always working with current information. That's hard to do with entry-level and legacy systems.

Faster month-end and real-time reporting

In one of my previous roles, at a company similar to iplicit in size and complexity, we used to aim for a 10-day month-end. With iplicit, it takes five, and three or four of those are spent waiting for purchase invoices to arrive from suppliers, not doing manual work.

If our CFO, Rob Steele, asks how much we've spent on marketing this year, I can click the general ledger code to get a full breakdown, drill down to the supplier, and see a copy of the purchase, all from the trial balance, without switching between tabs or sections.

We also track KPIs like net revenue retention, churn, new bookings, logos and marketing payback, using queries that populate Power BI or Excel directly. Setting up the dashboards took half a day; now it's a matter of refreshing each month. You can customise columns instead of being stuck with rigid reports, and when I need management information, I hit refresh in Excel and it's ready in 30 seconds.

The bottom line

The real cost of staying on entry-level software lies in the time spent on manual work that keeps growing while you wait. If your SaaS business is on course to double in size each year, as iplicit has on average for every year of its existence, you'll have twice the volume of manual adjustments to deal with in 12 months, and month-end will take proportionally longer with every cycle.

The best time to change might have been months or years ago. The second best time is now.

See how iplicit works for SaaS businesses

If you recognise your own finance team in any of this, from manual revenue recognition to a month-end that keeps stretching out, it's worth seeing what a system built for SaaS complexity looks like in practice. Take iplicit's three-minute quick tour to see it for yourself, or book a personalised demo to walk through your own numbers with the team.