Thread by @TheSaaSCFO

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…