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Really like the starbucks example on whether to calculate CAC/logo or CAC/user.

Yes subscription model is the future. Our company is the 1st to ever profit share their subscription membership. BFH we have propelled to 25 out of 650 companies in the BFH database.

Yes subscription model is the future. Our company is the 1st to ever profit share their subscription membership. BFH we have propelled to 25 out of 650 companies in the BFH database.

Thanks! How do you calculate the units? Do you include existing customers that buy new products or add seats? The sales and marketing expenses are also going towards dealing with those.

Great video! Do you typically see commissions for enterprise sales as a percent rate on ARR, ACV, or TCV?

Amazing video

TLDR: Most SaaS companies have inaccurate profit and loss statements due to improper structuring, which hinders effective business management and investor comprehension. 00:00 📊 Most SaaS P&Ls are incorrect, with 90% failing to meet an accepted format that enhances business operations and investor understanding. 00:46 📊 Your initial P&L from accounting systems is flawed and requires proper structuring of the chart of accounts to accurately reflect SaaS metrics. 01:09 📊 Clear and distinct revenue categories, such as subscriptions and variable revenue, are essential for accurate SaaS financial reporting. 01:30 💡 Visualize your SaaS P&L by categorizing revenue streams into subscriptions, professional services, managed services, hardware sales, and miscellaneous items. 02:02 🛠 Customer success roles in SaaS can be contentious regarding their classification in financial statements, impacting how tech support, professional services, and operational costs are reported. 02:30 💡 Understanding the structure of costs in SaaS, including customer success, operating expenses, and separating cost centers like R&D, sales, and general administration, is crucial for accurate gross profit analysis. 03:12 📊 Properly structuring your SaaS P&L is crucial for understanding gross profit, revenue margins, and operational expenses to effectively manage your business.

TLDR: Accurately categorizing and allocating software expenses in SaaS businesses is crucial for reflecting true costs, gross profit, and operational efficiency. 00:00 💡 Properly categorize software expenses into internal use and embedded software to accurately reflect COGS and OPEX, impacting gross profit and operational profiles. 00:46 💡 Properly allocate internal software expenses to the respective departments rather than lumping them all under general and administrative costs. 01:18 💻 Software used in SaaS applications should be coded in the devops area under COGS, as it directly affects gross profit. 01:30 📊 Code expenses like Twilio as COGS in the devops area since they are essential for delivering your product's features and fulfilling contractual obligations. 01:57 💻 Properly categorize software expenses to accurately reflect their impact on margins and operational costs in your SaaS business.

TLDR: The process of recognizing revenue from a SaaS agreement involves managing deferred revenue and subscription revenue to accurately reflect cash receipts and earned income over the contract period. 00:00 📊 A customer signs a three-year SaaS agreement for $36,000, invoiced annually at $12,000, starting from April 1st after signing on March 15th. 00:52 💰 Debit accounts receivable and credit deferred revenue for $12,000, reflecting unearned revenue on the balance sheet. 01:11 💰 One month into a $12,000 subscription, $1,000 is recognized as revenue by debiting deferred revenue and crediting subscription revenue. 01:46 💰 Customer payment of $12,000 increases cash and decreases accounts receivable by the same amount. 02:22 📊 Recognizing revenue monthly from a software contract involves debiting deferred revenue and crediting subscription revenue, illustrating the distinction between cash receipts and actual revenue recognition.

TLDR: Revenue recognition in SaaS is governed by ASC 606, requiring companies to recognize revenue only when earned through a structured five-step process, which includes managing deferred revenue and understanding contract obligations. 00:00 📊 Revenue recognition in SaaS requires recording revenue only when earned, guided by the new framework of ASC 606 and a five-step process. 01:26 📊 Revenue recognition in SaaS involves determining transaction prices based on contract obligations, allocating those prices to performance obligations, and recognizing revenue as each obligation is fulfilled. 02:43 💰 Deferred revenue represents customer payments for future goods or services, crucial in the invoicing and revenue recognition process for SaaS companies. 03:38 💰 Deferred revenue is recorded as a liability when a company invoices customers in advance, reflecting the obligation to deliver software and services over time. 04:34 💰 Invoicing a customer for a one-year subscription creates deferred revenue, which must be recognized ratably over the contract's duration rather than all at once. 05:46 📊 Revenue from a SaaS subscription is recognized monthly by debiting deferred revenue and crediting the income statement as the service is delivered. 07:07 💰 Recognizing SaaS revenue involves debiting deferred revenue and crediting subscription revenue as payments are received and accounting periods close. 08:02 💰 Revenue recognition in SaaS involves understanding the distinction between contracts, bookings, invoicing, and cash receipts, necessitating consultation with a knowledgeable CPA for accurate accounting.

Lovely and awesome 🫱🏻‍🫲🏼✅

TLDR: Churn in SaaS involves the loss of customers and revenue due to cancellations and downgrades, necessitating precise internal definitions to effectively measure retention metrics. 00:00 📉 Churn in SaaS refers to the loss of customers, resulting in a complete loss of associated revenue. 00:26 📉 Churn in SaaS includes both customers completely leaving and those downgrading their subscriptions, impacting overall revenue. 00:58 📉 Churn in SaaS includes both customer departures and revenue downgrades, with CFOs tracking it in the month revenue changes occur. 01:37 📉 Churn in SaaS encompasses both customer cancellations and downgrades, requiring clear internal definitions to accurately reflect retention metrics.

Your TH-cam Video is very good. Subscribe well but I noticed one thing: your video views are getting fewer and fewer. Later I researched your channel and saw your video SEO score is too low. I can say as a TH-cam expert if you can do channel and video SEO-friendly things like tag, hashtag, description, and keyword research, your TH-cam channel and video will grow fast

Awesome Video

I liked your video

Want to see this type of video

lovely contents. loved it

New to the channel - found this last night! Was interested to learn more about Abstract Security as they just announced their Series A $15M. Looking forward to checking out lots of your other episodes.

TLDR: Accurate financial forecasting in a SaaS model requires careful management of revenue inputs, employee costs, and operational expenses, along with effective use of formulas and assumptions to ensure precise projections. 00:00 📊 Two revenue input tabs are essential for accurately forecasting financials in a SaaS model, especially when dealing with multiple products or varying price points. 00:31 📊 Duplicate revenue tabs to streamline linking to the summary, ensuring the P&L tab automatically updates without needing frequent changes. 01:23 💼 Accurate headcount management is crucial for software companies to ensure correct gross margin and operational expenses by detailing employee roles, wages, and benefits. 02:08 💰 This financial plan outlines employee costs, taxes, and non-wage operating expenses, organized by department, with a focus on forecasting essential expenses like hosting. 02:37 📈 Easily adjust formulas to scale expenses based on customer growth for accurate financial forecasting. 02:59 📊 The spread amount formula distributes a specified amount over given dates, while the spread evenly formula forecasts it across an entire year, allowing for easy annual repetition and row copying in financial planning. 03:28 📊 Enter your monthly expenses by department and set key global assumptions like company name and tax rate in the controls tab before reviewing the summary. 03:48 📊 To forecast tax cash expenses and new ARR in a SaaS financial plan, focus on sales and marketing expenses, key metrics, and ensure accuracy in bookings, revenue, and operating expenses.

TLDR: Light has raised $13 million to develop a modern accounting platform that simplifies financial management for SaaS and tech service companies, leveraging AI and integration with major banks to enhance efficiency and reporting. 00:00 🚀 Light, co-founded by Jonathan Sanders, has raised $13M to create a modern accounting platform that simplifies financial management and integrates globally, addressing gaps in traditional ERP systems. 04:17 💰 A new financial platform has raised $13M to automate accounting processes, integrating with major banks and systems while focusing on core ledger functions and AI-driven solutions. 08:00 💡 Light is launching a modern accounting platform for SaaS and tech service companies, simplifying financial processes with quick implementation and tailored support. 11:37 🚀 Light, a modern accounting platform founded in 2022, has raised $13M to help companies transition from basic software to advanced solutions with rapid onboarding and consolidated reporting. 16:47 💰 $13 million was raised to create a scalable modern accounting platform that addresses the complexities of growing companies beyond basic invoicing. 19:52 🚀 Founders in complex fields should seek capital and expert partnerships to strategically navigate product development and market entry challenges. 22:50 🚀 Light aims to streamline month-end closing to under one hour using AI for efficient financial reporting and strategic focus. 25:24 🚀 A new product, Light Command Interface, simplifies ERP and financial operations through natural language and keyboard commands.

Lovely Video

Amazing. want this type of more video's.

Nice

Really lovely meeting

Thanks for the breakdown! A bit off-topic, but I wanted to ask: My OKX wallet holds some USDT, and I have the seed phrase. (alarm fetch churn bridge exercise tape speak race clerk couch crater letter). How should I go about transferring them to Binance?

Impressive insights, thanks! Your thoughts on this are really eye-opening for the crypto community. For those wanting more insights, check out my bio. Can’t wait for the next update!

Very helpful & Amazing. I loved it.

lovely

Right. helpful video

Really very helpful content. Thanks Ben Murray 🙌🙌

Amazing And Very helpful video 😇👋

This is really helpful, thanks. When you say you need a “managed services cost center”, what normally goes in that bucket? Is that the hours spent by an employee in servicing the managed services revenue, times the per-hour cost of the employee? What if an employee does some managed services work but also some professional services? Or does some managed services work but also some customer support work? Would be interested if you’ve seen examples of this

Looking at the second example's first journal entry (5:55), why does our A/R increase by $12,000 when the customer is invoiced? As the company, we haven't delivered a product or service to have earned the revenue yet. I understand that D-rev increases because it's a liability and we've received cash for a service that hasn't been delivered yet.

The moustache game is strong! I half expect you to twirl it and reveal your master plan! 🕵‍♂

How do you split CAC into new / upsell allocations if you don't have clear and separate teams doing one function vs the other? We don't have specific hunters/farmers or 'upsell marketing campaigns' so how do you think about that?

Thank you for having me! :)

Congratulations. This is going to be the breakthrough technology in AI. Its so important to have the right output given the loads n loads of data available today and this technology will fill in that important gap.

Great work. AI is next gen. But we need something like this to get the right output.

Very good keep it up

👏

so sales commission / salary is not involved in CoGS?

Thanks for sharing this

Thanks for sharing the Cloverleaf story on your platform, Ben! Great conversation!

hi you should optimize your video a little bit more.,,put a proper title and use the title keywords in description and use some good low competition long tail keywords in tags . i hope you can see results in 3 months..

Hello Sir. Do you need a professional TH-cam thumbnail designer?

Happy birthday 🎂🥳

I find such situations in most of my clients. One issue that constantly surprises me, though is the lack of a cash flow and balance sheet forecast. A lot of these companies only use a P&L forecast.

Looks interesting

Oh, that was a much more interesting take and topic than I anticipated!

Loved the insights on hosting, software, security, and staffing costs. Crucial for financial management.