How do I present a SaaS company’s recurring revenue to a lender?

A lender has no feel for software, so give them something familiar: statements they can read and records they can check. Begin with the income statement and show recurring revenue on its own line, apart from set-up fees, consulting and anything that will not repeat. Support it with a customer list showing plan, start date, monthly amount and status.

Explain movement. Show how many customers joined, left and changed plan in each period, and why people cancel. A lender will ask how long customers tend to stay, so have that answer from the data. Show how revenue is spread: if a handful of customers carry most of it, say so and explain what holds them in place.

Tie the numbers to evidence. Billing system reports should match the bank deposits and the financial statements. Include the costs that go with the revenue, such as hosting, support and the people who maintain the product, so the lender sees cash left after delivering the service. Describe how recent customers were won and what it cost. Your accountant can prepare the package, and a short written explanation of your plans for the money will round it out. Offer the lender a chance to ask questions before deciding.

Key takeaways

• Put recurring revenue on its own line, apart from one-off fees.
• Show joins, cancellations and plan changes for each period.
• Match billing reports to bank deposits and statements.