On the one hand, the SaaS business model offers ground-breaking benefits for providers.
Financially, it inverts convention. Rather than tying payments to services rendered, subscription software is prepaid.
Coupled with the high margins inherent in cloud software, the timing of cash flow is a thing of beauty; renewal subscriptions are a predictable annuity which fund operations (especially for fast-growing companies). While this creates a slight bit of accounting overhead to maintain a framework to accrue prepayment liabilities and to recognize revenue properly, it is insignificant relative to the benefits.
On the other hand, operationally SaaS businesses are very conventional. Behind the scenes, we are hustling to innovate and support customers. In Gain’s specific world of compliance, sales and usage patterns are dictated by a cyclical filing calendar.
And, just as in the oldest of business models, there’s most definitely a seasonality.
At Gain, we become like an extension of our customer’s financial reporting teams. While our software is the cornerstone of every relationship, our goal is broader than just providing the industry’s the best tool to make a filing; rather, our goal is a successful filing, each and every time.
The upshot of this, for Gain, is that we’re on call to assist our customers during filing season in any way, shape, and form requested, and to do so instantly. The definition of the workday and the workweek get awfully fuzzy and flexible during this time of the year.
So, while the SaaS business model offers significant advantages in terms of cash flow and margins, operationally, there is less magic. There’s no such thing as a free lunch – hard work and attention to creating value drive the product and customer experience.