I review a lot of SaaS P&L's. 90% are structured incorrectly or need improvement.
Quick thread on the 4 common mistakes in your SaaS P&L setup. With pictures :) #saas
The SaaS P&L Structure
A properly formatted SaaS P&L tells you so much! And it's easily consumable by operators and investors.
- gross profit
- margins by revenue stream
- OpEx profile
- EBITDA
- and it easily feeds S&M efficiency metrics
Cost of Ops = Dev Ops in this example
The Chart of Accounts
The COA is a numerical and descriptive listing of all the accounts on your general ledger from the balance sheet to the income statement.
This is "under the hood" of your P&L. You need enough rev and expense detail for proper coding, analysis, rollups.
Department Coding
You need to code ALL expenses by department or cost center. This is fundamental to the SaaS P&L.
This means coding by Class in QBO or by an additional dimension in your accounting system. In-line COA structure also possible.
Revenue Recognition
At some point, you cannot manage your SaaS business using cash accounting. Especially if you invoice annually.
Margins/profit jump up and down. Hard to understand true economics.
Anything you'd like to add?
I just held a class/webinar on this. Catch the replay, slides, and template at the link below. Plus I have a ton of other video lessons on SaaS metrics and concepts in this free course.
thesaasacademy.com/offers/zz3ZR2W…
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