What is SaaS and how to keep track of subscriptions
The SaaS subscription business model has transformed the way businesses deploy technology. In the past, companies would need to develop software in-house – a time-consuming and technical process that could take months to test and implement. Today, companies are able to subscribe to ready-made software with flexible pay-as-you-go packages.
The benefits of SaaS subscriptions are enormous, especially for small businesses, which have fewer resources to invest in technology and in developing their own technology. Instead, subscribing to software offers them a way to test technology from external providers with low-commitment packages and trim costs for their business.
Despite its many benefits, if left unmanaged, SaaS subscriptions can pile up quickly, with companies adding new subscriptions for software regularly. In fact, the average number of SaaS subscriptions per company is 137.
This leaves the potential for overlaps in the types of software used, unnecessary payments running in the background and missing dates for cancelling payments for unwanted subscriptions.
What are SaaS tools and subscriptions?
First off, SaaS stands for “software as a service” and refers to technology software or tools hosted in the cloud – in contrast to traditional on-premise software which is hosted on physical servers.
These tools are ready-made and can be used by businesses through pay-as-you-go SaaS subscriptions, which allow companies to use technology without the need to develop it in-house themselves. Often, these subscriptions are paid monthly or annually depending on a SaaS provider’s pricing plan.
The benefits of SaaS tools for small business
So why do companies love SaaS subscriptions? Here are a few reasons.
Flexibility to adapt to market and business needs
Whether on a tiered pricing plan or a pay-as-you-go model, SaaS subscriptions offer companies the ability to try and test ready-made technology easily with greater flexibility and less commitment and investment – effectively lowering their costs.
This gives them the ability to explore new options in the market should a type of software prove to be unsuitable or ineffective for their company. Instead of being weighed down or attached to specific software, they can easily move on to the next SaaS provider which can better serve their business needs and improve their processes.
Businesses looking to scale quickly and adapt to market needs are not weighed down or burdened by the costs, manpower and investment needed to develop and maintain their own software in-house.
Instead, they are free to find the best solution available in the market – with software at the ready through a subscription.
With ready-made software available through SaaS subscriptions, the need for an internal developer team is removed, freeing up resources for small businesses to focus elsewhere. Meanwhile, an array of software and technology becomes immediately available to businesses through flexible subscriptions.
This is especially crucial for small businesses who may lack the resources to develop software internally – whether that be due to cost, a lack of a developer team or the time it takes to create, test and deploy software.
A dedicated support team to fix bugs
Prior to SaaS subscriptions, not only did businesses need to develop their own software, but they also had to maintain these on-premise solutions. When bugs or issues came up in the software, internal IT teams would have to spend time fixing them.
The more technology or software a company would use, the more a company would spend on expanding their IT teams to maintain it.
With SaaS subscriptions, there is a dedicated team to fix any issues which arise when employees use a particular software, as provided by each individual SaaS provider. This way, internal IT teams are free to direct their focus elsewhere and companies can save money and time.
Removes the need for physical servers
Unlike on-premise solutions which are developed in-house and hosted in physical servers, SaaS software is hosted on the cloud. What this means is that businesses no longer need to worry about taking up physical space to house large amounts of physical servers when using the software.
Physical servers can be a huge capital expense for small businesses, requiring a larger investment. They also occupy a lot of space which can require businesses to take out larger office spaces that are higher in rent.
Meanwhile, SaaS solutions involve a much more affordable operational expense in the form of a monthly or annual subscription – eliminating the need for on-premise physical servers.
What types of cloud SaaS tools are there?
There is a growing market for SaaS providers and software can be found to improve almost every business process.
The following are some examples of the different types of SaaS solutions:
- For developers: GitHub, Atlassian, Embold
- For communication: Slack, Microsoft Teams, monday.com
- For customer success: Gainsight, Freshdesk, ChurnZero, Totango
- For sales and marketing: Salesforce, Marketo, HubSpot
- For project management: ProofHub, Asana, Trello, Notion, Google Suite
Below are Spenmo’s top software picks:
How do SaaS payments work?
Payments for SaaS software typically involve monthly or annual subscriptions where businesses using the software are automatically billed every month or every year, respectively, until they decide to cancel the service.
The beauty of this ‘pay-as-you-go’ approach for your business is that you are allowed to cancel your subscription at any point without incurring a massive cancellation fee and are not penalised for opting out of the service.
However, reaping the financial benefits of SaaS software subscriptions only works if your business has a system of keeping track of all ongoing subscription services, so as not to incur any unnecessary billings for unused software – especially since payments roll automatically from month to month.
Why SaaS payments are difficult to keep track of
Unfortunately, most small businesses are using Excel or Google spreadsheets to track their subscriptions, an inefficient and unwieldy process. The more subscriptions a company opts into, the more difficult it becomes to manage and track them manually.
By going without an efficient subscriptions tracker app or management system, companies are more likely to lose track of recurring payments, miss subscription cancellation dates and overlook unnecessary overlaps in the software subscribed to.
Another challenge with SaaS subscriptions is that not all departments or roles will need access to the same software. For instance, only those in the marketing team will need access to sales software like Marketo. Tracking subscriptions and licenses needed across departments can be challenging when only relying on a spreadsheet.
What is a subscription management system?
Companies are now looking to subscription management systems to track recurring payments to multiple SaaS providers in order to get a firm handle on their finances.
A subscription management system allows the tracking and managing of SaaS subscriptions being used within a company by its employees. These systems help businesses trim their subscription list down to the necessary payments for regularly used software and cancel subscriptions for those which go unused.
It gives businesses a clear overview of their cloud-based subscriptions annual or monthly payments, how they are being used and by whom, and offers tools for optimizing subscription payments for reduced spending and effective budgeting.
How a spend management platform can keep track of subscriptions
By keeping track of multiple SaaS subscriptions to different vendors through an expense management platform, your business is able to skip the time and effort of manually tracking monthly subscriptions, freeing up your employees for less repetitive tasks.
When linked to your chosen expense management platform, managers can set pre-set limits to virtual cards to avoid overcharging for all subscription payments made within the company.
This is especially useful for SaaS subscriptions as every department is likely to need different software. By issuing corporate cards to a representative for each team, payment data is captured automatically and tracked. Meanwhile, management still maintains a comprehensive view of all spending and subscriptions.
Instead of using personal credit cards, management can use corporate virtual cards to manage SaaS subscriptions by assigning spending caps to manage recurring payments, ensuring payments for the software never exceeds these limits.
Things to consider when choosing a platform to track your paid subscriptions
There are many platforms out there that provide subscription services, however, these tracker apps are mostly catered for personal use. For small and medium businesses, tracking subscription payments is just part and parcel of a long list of expenses that need to be paid.
When choosing an expense management platform to keep track of subscription payments, look out for the following features:
- Create multiple virtual cards. Sharing one founder’s card for all online payments is ancient history. Having access to multiple cards, allows teams to be more independent on their online spending. Moreover, sharing the OTP from your personal card makes you more susceptible to fraudulent transactions.
- Real-time visibility on expenses. Online payments, subscriptions, and app purchases are difficult to monitor when connected to a personal credit card. Most payments are seen only when the billing statement comes in. Choose a software that allows you to see payments as they are made in real-time.
- Stay within budget. Choose an expense management software with a virtual card feature that allows you to set spending limits and merchant locks to help you stay within budget
- Avoid unexpected purchases. Using a personal credit card will make it difficult to separate company and personal finances when the bill comes in. Spenmo Smart Cards may be pre-loaded with funds from your corporate bank account or an existing credit card so you don’t need to worry about mixing your corporate expenses in your personal card.
- Accepted by major merchants. Virtual cards should be Visa or Mastercard enabled for ease of use on online transactions and to avoid rejected payments. You can use Spenmo Smart Cards for all your online payments and subscriptions including app purchases n the apple store and google play store
- Create burner cards. This is an underrated feature but by creating burner cards, you can easily try new software without worrying about unexpected charges from your credit card when the trial period ends.
- Cashback and promotion. Oftentimes, expense management platforms have exclusive cashback and promotions with various merchants to help companies save money. Speak to a Spenmo representative to find out what exclusive deals are available for you.
Subscription tracking systems can help companies save more on unused cloud tools. Having an expense management platform with access to virtual cards can help you manage your SaaS expenses and upcoming bills, set limits, and create burner cards whenever you want to try out new software.
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