🎙️ Hey there, SaaSpreneurs!🎙️

👋 Hey there, it's Ben Murray! I'm excited to bring you this week's deep dive into an often overlooked but crucial topic: reseller revenue. In our latest podcast episode, 🎙️ we tackled the complexities of how to correctly code reseller revenue in your SaaS profit and loss (P&L) statement. 📊

🧐 3 Mistakes Finance Makes When Planning Revenue

Nathan Latka joins me live on October 9th. Save your seat here. Especially if you want to learn how to scale your business with debt financing.

🚀 Don't miss out on these valuable insights—tune in now, and let's ensure your SaaS P&L is in top shape! 🔧

You can also listen to this episode here.

📓Key Concepts to Learn💡

1️⃣ Reseller Revenue in SaaS: Reseller revenue represents the sales made from third-party software products your company resells. These products may be integrated into your offering to provide a more comprehensive solution to your customers. For example, if your SaaS product lacks a specific feature, reselling a third-party product that fills this gap can add value to your overall offering and appeal to a broader audience. 🔄💼

2️⃣ Importance of Accounting Treatment for Reseller Revenue: When recording this revenue, it should be placed into a different general ledger account from the revenue generated by your company's products. This ensures that financial statements accurately reflect the sources of income and allow for better financial management and analysis. 📊📈

3️⃣ Valuation Implications of Reseller Revenue: During company valuations, especially in scenarios like mergers and acquisitions, the focus is often on the proprietary software and technologies developed by the company, as this represents the unique value of the firm. IMO, resold products do not contribute to this proprietary value, so separating this revenue ensures that the company's valuation is based on its actual IP and technological assets. 💰💡

4️⃣ General Ledger Account Coding: To implement this segregation, reseller revenue should be assigned a unique general ledger account. Even though this revenue might be combined with subscription revenue for high-level reporting, the separate ledger entry ensures that it can be isolated for detailed financial analysis. This practice is a form of detailed revenue tracking essential for clear financial analysis and decision-making. 🧾🔍

5️⃣ Materiality in Financial Reporting: Materiality refers to the significance of an amount in financial reporting. If reseller revenue forms a large portion of the total revenue, failing to disclose and separate it properly could mislead stakeholders about the company’s performance and growth. Accurate reporting of material reseller revenue is crucial for transparency and building trust with investors and other stakeholders. 📉🔐

Ready to supercharge your SaaS business? Join Ben’s SaaS community with over 6,000 members for exclusive content. Don't miss out — maximize your SaaS knowledge today!

If you found this episode helpful, make sure to tune in to future episodes of SaaS Metric School to broaden your knowledge of essential SaaS metrics and finance topics.

Got any burning questions or specific metrics you'd like us to cover?

Drop us a line, and we'll do our best to address them in upcoming episodes.

Until next time, keep hustling and measuring those metrics!

Best regards,
Ben Murray
Host of SaaS Metric School

P.S. Don't forget to subscribe to our podcast and share it with your SaaS business buddies. Together, let's conquer the world of SaaS metrics!

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