SaaS companies · Software and SaaS
Subscription revenue that reconciles from gateway payout to recurring-revenue bridge
An Indian SaaS company usually sells in dollars, collects through two or three gateways and reports to investors in a format the ledger was never built to produce. We tie each payout to the invoices it settles, recognise revenue across the service period and keep the recurring-revenue figure in step with the books.
In one paragraph
B2B SaaS companies selling subscriptions, often to customers outside India, are usually between seed and Series C with ₹5–150 crore of annual revenue. Their founders and finance heads wrestle with the plumbing beneath the metrics: payouts net of fees and refunds, and plans that change mid-term. Many also have a group structure in which the Indian company is a service provider to an overseas parent, not the seller of the subscription.
Founder or CEO, often with the head of finance
The economics
How the money moves in this trade
Money reaches a SaaS company in pieces. A customer pays for an annual plan by card. The gateway deducts its fee, may hold a reserve, converts the currency and settles a net amount days later. Upgrades, downgrades and refunds then adjust an invoice that was already counted. Each of those steps has to be unwound back to gross revenue, payment cost and exchange difference before the deferred-revenue schedule means anything.
Some companies move to an overseas holding structure. The Indian entity then often stops selling the product and instead bills its parent for engineering and support, usually at cost plus a markup. Its own books answer a different question: whether the cost base and the markup are documented. Investor reporting is prepared at the parent. Running both views from one set of records is where most of the effort goes.
The problem
Where the numbers usually break down
Gateway payouts booked as net revenue
Fees, reserves and refunds are netted off before posting, so revenue, payment cost and the balance due from the gateway never appear separately.
Plan changes overwrite the original invoice
Upgrades and mid-term downgrades are handled in the billing tool and the ledger records only the latest state, so the deferred-revenue balance stops matching the contracts.
Export receipts without matching records
Foreign receipts arrive through gateways and collection accounts, and the inward remittance records that support zero-rated export of services are not tied to individual invoices.
Intercompany billing drifts from the cost base
After a move to an overseas parent, the cost-plus invoice is raised from a budget and is never trued up to the cost the Indian entity actually incurred.
Trials and service credits are invisible
Extended trials, promotional credits and service credits for downtime reduce what customers pay but are never recorded, so the recurring-revenue figure overstates the business.
What we do
The work, and the result each part produces
Gateway-to-ledger reconciliation
Each payout broken back into gross charges, fees, refunds, reserves and exchange difference, and matched to the invoices it settles.
Revenue and payment cost are reported gross, and the gateway balance is a known receivable.
Contract-level deferred revenue
A recognition schedule built from the billing system's subscriptions, with upgrades, downgrades and cancellations applied on the date they take effect.
The deferred-revenue balance can be traced to named customers.
Recurring revenue tied to the books
The recurring-revenue bridge produced from the same subscription data as the recognition schedule, with any difference explained each month.
The figure in the investor update agrees with the ledger.
Export-of-service records
Foreign receipts matched to invoices and inward remittance records, with the letter of undertaking, GST returns and any refund claim kept consistent.
Zero-rated exports are supported invoice by invoice.
Cost-plus billing for overseas-parent structures
The Indian entity's cost base defined in writing, the intercompany invoice trued up to actual cost each quarter, and the working kept for the transfer-pricing professional.
The service fee to the parent rests on a cost base that can be shown.
Realised price review
Realised price by plan and cohort compared with list price, after credits, trials and annual-prepayment discounts.
Discounting is visible as a cost, not buried in a lower average.
Where we start
The first steps of an engagement
Billing and gateway exports
We ask for subscription and invoice exports from the billing platform, settlement reports from each payment gateway and statements for the collection accounts. Where there is an overseas parent, we also ask for the intercompany agreement.
Payouts matched to invoices
Each gateway payout is broken back into gross charges, fees, refunds, reserves and exchange difference, and matched to the invoices it settles.
Contract-level deferred revenue
A recognition schedule is built from live subscriptions, with plan changes applied on their effective dates. The ledger is adjusted to agree with it.
Recurring revenue tied to ledger
The first report shows the recurring-revenue bridge reconciled to recognised revenue, and deferred revenue by customer, with every difference explained.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Gateway payouts reconciled to invoices, by gateway
- Deferred revenue by customer, agreed to the ledger
- Recurring-revenue bridge reconciled to recognised revenue
- Export invoices matched to inward remittance records
- Intercompany cost base and markup, quarter by quarter
- Realised price against list price, by plan
Who it suits
Written for, and not the right fit for
- You need the statutory audit or the transfer-pricing accountant's report signed; an independently engaged CA signs both.
- You want foreign tax filings prepared; we coordinate with your overseas adviser but do not file outside India.
- B2B SaaS companies selling subscriptions in India and abroad through card gateways and invoicing.
- Companies with an overseas parent that bills customers while the Indian entity builds and supports the product.
- Teams preparing for a priced round in which the recurring-revenue figure will be tested against the ledger.
Services
Services this work draws on
Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗MIS and financial planning
Reporting built around the questions you actually need answered.
Explore service ↗Fractional CFO services
Senior financial leadership on the days you need it, not a full-time hire.
Explore service ↗GST, TDS and tax compliance
GST, TDS and income-tax prepared from reconciled data, not a working file.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
Is the recurring revenue in our billing tool reliable enough for investors?
It reports what the billing tool knows. It doesn't know about credits agreed by email, invoices raised outside it or refunds processed directly through the gateway. Reconciling it to the ledger each month is what makes the figure safe to quote.
What changes for the Indian company after a flip to an overseas parent?
Usually the Indian company becomes a service provider to the parent, billing for engineering and support at cost plus a markup. Its books then need a clear cost base, a quarterly true-up and records for the transfer-pricing report, which is prepared and signed by an independently engaged CA.
Who prepares the GST refund claim on exported services?
We can. We prepare the refund application and its supporting records — invoices, remittance records and returns — and file it where you authorise us to. Anything that needs a professional's certificate goes to an independently engaged CA.
5th Quadrant prepares the cost base, intercompany workings and export records. The transfer-pricing accountant's report, the statutory audit and any prescribed certification are signed by an independently engaged licensed professional, coordinated through 5th Quadrant. Full detail is on our Professional Scope page.
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