Are Those Monthly Subscription Fees Snowballing on You?
I find cleaning out a garage about every 5 years (preferably longer) like running a marathon on flat terrain with no hills or beautiful scenery–it’s as though it will never come to an end.
You will experience the same frustrations when you start looking under the hood of the general ledger accounts storing all of your monthly subscriptions. I guarantee you’ll be saying things like,
What is this?
What the [censored]?
Why are we even paying for this? I thought we …
Yeah, me too. But I have a couple of hacks that might help.
Step 1. Extract the General Ledger Detail of your Subscription/SaaS Costs
When I design or modify general ledgers, I generally use one or more accounts just for monthly/annual subscriptions depending on materiality.
If that’s not the case, you will need to identify all of the accounts where those fees are posted (good luck).
Once you download the data, you’ll want to clean it up with the objective of showing every vendor along the left-most column and the costs on a trailing-twelve month grid like below. Realize you may need to normalize your data first and then create a pivot table to achieve the presentation I show below.
Now I have a rough idea on 1) what is being spent, 2) the magnitude of the costs, and 3) a general idea of who is responsible for each subscription.
By the way, don’t be surprised if your data does not look this clean. It won’t. And, I’m pretty certain some subscriptions will be posted to more than one account.
Incidentally, let me add that I do this data cleansing on a cash basis. So in the case of Marketo, Basecamp, and Zendesk above, those annual costs are probably deferred and amortized over a 12-month period in the company’s general ledger.
Still, I like grabbing and analyzing the costs on a cash basis which will begin to make more sense in the second hack below.
So before you go to the second hack, get your data and your posting processes nailed down.
Step 2. Create a Master Checklist for All of Your Subscriptions
The secret to managing these costs is creating a checklist that identifies EVERY subscription, the owner of the subscription, and the costs. Here is what my typical schedule looks like:
Your checklist may wind up having more detail, maybe less.
But you get the idea.
I’d even go so far as to include calendar reminders when an annual subscription is coming due 30 days ahead of time.
Make sure your HR people have a list of all subscriptions that exiting staff are responsible for. That serves two purposes. First, HR can ensure they no longer have access to those subscriptions. And finally, a new person can be assigned ownership to the monthly/annual subscription.
Do You Have a Better Approach?
I like streamlined simplicity. But perhaps you have a better approach or can improve on the one above. I’d like to hear about it.