How Syndic8 Automates Tracking Subscription Changes & Achieves GAAP-Compliant SaaS Revenue Recognition With Synder

Subscription revenue recognition has been evolving alongside the growth of subscription services and the rise of modern billing models. However, it’s become a bit of a puzzle for many SaaS companies. The daily grind of their business operations brings about a lot of difficulties —tiered pricing, prorations, and product/service bundling. Ensuring compliance with GAAP standards further complicates matters, particularly if we take into account complex requirements to recognize SaaS revenue.

It’s a lot to juggle, and figuring out the best way to recognize revenue and finding a proper all-in-one accounting tool to do that isn’t easy. That’s the reality our customer Syndic8, the world’s leading ecommerce data distribution platform, faced while navigating through revenue recognition.

Syndic8: Helping brands get the product info up and online

Syndic8 is a passionate team of entrepreneurs from Boston who came together in 2018 with a particular mission in mind: to enable brands to sell more online, with less effort. Their innovative syndication platform redefines conventional approaches to centralization and distribution of product data, empowering brands and retailers to seamlessly exchange high-quality data. With advanced features like automated image matching, category alignment, and AI-driven content enhancement, Syndic8 helps brands and retailers ensure their products are accurately represented across their entire network of online sales channels. 

But how does all this play out in the real world? Imagine a prominent retailer, let’s call them XYZ. XYZ sells their products on their own website, but also platforms like buystuff.com or buymorestuff.com. Behind the scenes, Syndic8 facilitates a smooth flow of information between XYZ and these selling platforms, all of whom have differing data requirements.

Consider selling a shirt. XYZ needs to supply each buystuff.com and buymorestuff.com with its color options, available sizes, pricing details, and measurements. And of course, they’d want to use detailed pictures on all of the websites to give customers the best shopping experience and prevent product returns resulting from inaccurate representation. Syndic8’s platform ensures the seamless, continual transmission of all this critical data. This way, they enable XYZ and other retailers to showcase their products effectively on every platform they’re featured on, with all necessary information whenever it’s needed.

Discovering Synder

Joe DiNardo, COO at Syndic8, knew how important accurate accounting was early on, given his background in finance and subscription-based businesses. Opting for QuickBooks Online for accounting and Stripe for subscriptions and payments, Joe soon realized he needed to integrate the two so that they could work together smoothly. This led him to Synder, a solution that did not only meet the precision criteria but also offered scalability:

“As a company, our accounting needs have matured significantly over the last 6 years, and we have hit the limits of our current platforms. We needed to quickly implement something that was going to be powerful, practical, and also sustainable with our growth trajectory…and that’s where we landed on Synder.”

That was 2020, and Syndic8 has been a happy Synder customer since then.

Problem: Facing the need for subscription revenue recognition and platform limitations

At first, managing monthly Stripe subscriptions was pretty simple for Syndic8—many payments were made in arrears, or prepaid short term, so there was no need to worry about revenue recognition. But as the business grew and customers began subscribing for longer periods with more variation in payment terms, revenue recognition became a daily headache.

As the company and its subscriptions evolved, Joe soon realized the limitations of their platforms:

“Stripe is great at subscriptions and proration, that’s kind of their bread and butter. QuickBooks doesn’t do subscriptions at all but it’s great for double entry bookkeeping. Stripe just doesn’t really want to be at all involved in the accounting component of subscription revenue. Our business model has become complex enough that the feature gap between the two needed to be addressed. We’ve had more and more use cases that stretch the limits of our platforms in terms of competency and abilities.”

While both platforms had their strengths and were necessary to recognize revenue, they fell short in managing the complexities of subscription and accounting tasks at the same time, leaving Syndic8 in a bind. 

The situation got even more complicated when subscription terms started to change frequently. As Syndic8’s acquisition of customers grew exponentially, they needed to automate their subscription management. Manually tracking these changes became increasingly troublesome. Thus, they required a solution capable of handling daily proration, advance and arrears billing, tiering, and discounts while seamlessly integrating with existing platforms for accurate and efficient data transfer.

Solution: Synder RevRec engine powers up revenue recognition for Syndic8

When Synder launched the RevRec product, the company was among the first ones to try it out. Synder was indeed the bridge to make the best of QuickBooks Online and Stripe and automate the complex process of subscription revenue recognition.

What’s Synder RevRec exactly?

It’s a robust module designed to streamline and automate revenue recognition processes for businesses utilizing Stripe subscriptions. Synder RevRec automatically tracks subscription changes in Stripe, updates recognition schedules and records revenue correctly in the accounting system. The tool ensures compliance with both GAAP standards and specific regulatory requirements such as IFRS 15 and ASC 606, making it suitable for SaaS companies.

So, how has Synder enhanced and optimized Syndic8’s revenue recognition?

1. Automatic detection of subscription changes in Stripe and GAAP compliant sync to QuickBooks Online

One of the biggest pain points in SaaS revenue recognition is subscription changes. Synder RevRec’s standout feature is its complete automation, eliminating the need for manual data entry. Changes to Syndic8’s subscriptions in Stripe are seamlessly detected and incorporated into the system without any manual intervention required. These include:

• Refunds;
• Subscription cancellations and upgrades;
• One-time products used in subscriptions;
• Multiple products (performance obligations) inside of the subscription;
• Custom billing periods, and more.

As Joe puts it:

“Subscriptions are tough. Things change mid-term in a subscription and the RevRec + proration implications can be quite large. Synder picks up all those changes automatically.”

Moreover, Synder RevRec syncs directly with QuickBooks Online, while many apps just show  the raw numbers, leaving you with the task of entering data manually. The tool solves this problem with automation while also filling the gaps for Syndic8 when these platforms fail:

“One of the examples that I use that’s very relevant to us right now is we have these large B2B relationships where we may need to record a sub customer in QuickBooks Online language. But Stripe doesn’t really know or understand that kind of hierarchy. Synder heard our need and quickly turned around an enhancement that made this flow seamlessly, replacing a tedious, manual, and error-prone headache.”

Stripe doesn’t provide a hierarchy for billing, which results in many unrelated subscriptions for different customers with the master customer name in the metadata. Synder offers a solution by enabling the creation of a rule to establish this hierarchy so that both the customer and sub-customers are accurately created and linked in QuickBooks, based on the master customer name provided in the metadata.

This way, Syndic8 can maintain accurate and up-to-date financial records without the hassle of manual input, automating the tedious task of tracking subscription changes and getting more flexibility. 

2. Granular view of subscriptions

The harsh truth about many revenue recognition platforms is that not all of them offer varying degrees of granularity for subscription revenue records. With Synder, Syndic8 had two options: they could either choose to create a recognition entry for each subscription or create one entry across all subscriptions at the end of the month. 

Since they wanted to have more control over their subscription data, they chose the more detailed approach for each subscription:

“That’s just a preference for even more granularity per subscription. For our QuickBooks Online reporting, full detail is imperative because our P&L goes down to the product level. For example, we have four products on an invoice. I don’t want to just round it all together for revenue recognition. I want RevRec to show me how much we recognize per product, per customer, per month. I couldn’t operate the business effectively if Synder didn’t provide this level of detail.”

This level of granularity ensures Syndic8 stays on top of their subscription revenue and can dive into details per line item for accurate QuickBooks Online reporting. 

3. Processing invoices with Net 60 payment terms

Processing invoices with long payment terms poses unique challenges for many SaaS businesses. Take, for example, a scenario where the services start on March 20th, yet the customer adheres to Net 60 payment terms and only makes a payment on May 3rd. What’s the best way to approach revenue recognition in this case?

Since Syndic8 does have a variety of payment terms, they needed to capture the revenue from those subscriptions in their reports, without waiting till the term ends:

“If one of our prospective customers subscribes in the beginning of December, but we don’t receive payment until January: lots of potential issues pop up if we aren’t tight in revenue recognition. Here you have accounting events that span multiple financial periods, and RevRec needs to allocate the proper amounts to each period. Add more complexities, e.g. they change their subscription level between subscribing and paying, and you can imagine how complicated the math gets.”

Synder RevRec identifies the open invoice within Stripe and starts recognition immediately. This way, the Accounts Receivable ledger reflects the outstanding invoice during the period preceding the payment. As soon as the payment comes in, Synder closes the invoice, and effectively clears the Accounts Receivable, signaling that the money is received and can be recognized. What’s more, Synder accounts for Stripe fees as well, ensuring that the books are reconciliation-ready at any time.

That’s how Synder RevRec provided Syndic8 with necessary advanced billing and arrears billing, making it easy for the company to deal with complicated billing scenarios.

4. Recognition of discounts

Different businesses have various preferences for reporting discounts. For some, it’s crucial to have a clear understanding of the discount amounts. Others may want to differentiate between various types of discounts in their P&L, such as specific campaigns versus regular discounts.

On the other hand, in the SaaS industry, regular discounts on yearly subscription plans are standard practice, so there’s less concern about tracking them individually. Instead, these businesses prefer the net income to directly hit their P&L.

Synder RevRec is flexible and caters to any of these use cases. Joe decided to track discounts in their P&L using the same granularity as revenue GL entries, to ensure that both the product total and discount are clearly visible in Syndic8’s P&L statement.

Results: Syndic8 automated tracking subscription changes and is ready to scale

Since implementing Synder RevRec into their existing workflow, Syndic8 has achieved remarkable results in optimizing their SaaS revenue recognition processes. One of the major things is a significant reduction in manual efforts associated with tracking and accounting for subscription changes. Revenue recognition for their Stripe subscriptions is now fully automated, freeing up valuable time and resources to focus on core business activities even with frequent changes in subscription terms. And everything’s synced to QuickBooks, which means they don’t have to come back and enter anything manually at the end of the month.

Moreover, Synder RevRec provided Syndic8 with granular reporting capabilities, allowing them to maintain control and visibility into their subscription revenue, down to the product level. They can see how much they recognized per each subscription, month by month. This level of detail has empowered them to drive business growth with confidence, knowing that their financial data is accurate and reliable.

The highlight of the Synder RevRec experience was the product’s ability to cover all the basic SaaS use cases, from cancellations and refunds to upgrades and downgrades. In the words of Joe DiNardo:

“I don’t see any other good options out there to do daily revenue recognition and prorations on subscriptions, while mixing combinations of advanced/arrears billing and one-time/recurring items. There’s just a lot of complexity in there and Synder generates thousands of GL entries for us to get us where we need to be.”

Now, with SaaS revenue recognition sorted out, Syndic8 is ready to scale their operations and take on more subscriptions. With Synder by their side, they’re confident that the company can handle whatever comes their way, whether it’s managing 1,000 or 100,000 subscriptions.

Ready to streamline revenue recognition for your SaaS business?

Struggling with SaaS revenue recognition challenges? Exhausted all options without finding the perfect fit? Sign up for Synder’s all-inclusive 15-day free trial to check out the software’s potential, and get in touch with our team to try out Synder RevRec for your SaaS business. We’ll tailor the tool to address your specific needs, making revenue recognition a breeze. Don’t let revenue recognition complexities hold you back—let Synder RevRec simplify the process for you!