When to Defer, When to Recognize: Implementation Revenue Timing

by Sharai Lavoie | Apr 14, 2026 | Revenue Recognition, Technology

The Timing Decision That Determines Whether Your Income Statement Reflects Reality or Assumptions

The Scenario That Creates the Problem

Your engineering team is twelve months into a major SaaS implementation. The contract includes $400,000 in implementation fees covering both standard setup work and platform-specific development that modifies the source code. The go-live date is still three months away.

Your accounting team is recognizing all implementation revenue over time using a cost-to-cost method. Progress looks steady. The income statement looks healthy.

The problem: half of that implementation work is not distinct from the SaaS subscription. That revenue should be sitting on the balance sheet, not flowing through the income statement.

Two Buckets, Two Timelines

Implementation services in a SaaS arrangement fall into two categories. Non-complex services that provide standalone value to the customer are recognized over time as they are delivered. Complex services that modify the platform’s source code are not distinct from the SaaS and must be combined into a single performance obligation.

The timing implications are significant:

Non-complex services (Group A): Revenue begins immediately. As the team completes gap analysis, data conversion, system architecture, and training, the customer is consuming and benefiting from those activities. Recognition follows a measure of progress, typically a cost-to-cost or labor hours method.

Complex services (Group B): Revenue is deferred. Because these activities are inputs to the SaaS itself, their value is not transferred until the product goes live. The implementation fees attributable to Group B sit as deferred revenue on the balance sheet until the go-live date, then amortize over the remaining contract term alongside the SaaS subscription.

The Allocation Challenge

Splitting a single implementation fee between Group A and Group B requires determining the standalone selling price of each set of services. For many software companies, this is the hardest part.

Non-complex services often have observable pricing, such as gap analysis, training, or data migration services, or the services may be available from third-party providers at known rates. Complex services, by contrast, are rarely sold independently. Their value is embedded in the SaaS subscription.

The result: companies frequently need to estimate the standalone selling price using either an adjusted market assessment approach or an expected cost plus margin approach. The methodology must be documented and applied consistently across contracts.

Subcontractor Costs Follow the Same Split

When third-party development partners or subcontractors provide services during the implementation period, their costs must be bifurcated between Group A and Group B activities, and between the pre-go-live and post-go-live periods.

Consider a security monitoring subcontractor that provides services throughout both the development period and the post-go-live operational period. The portion of their costs attributable to the pre-go-live development work is allocated to Group B and deferred. The portion attributable to the post-go-live period is recognized as a cost of revenue alongside the SaaS subscription revenue.

This cost bifurcation ensures that cost recognition matches revenue recognition, a fundamental principle that many software companies overlook when they treat subcontractor invoices as period expenses.

The Materiality Consideration

ASC 606 permits a practical expedient: if a performance obligation is immaterial in the context of the contract, the entity is not required to account for it separately. Some companies use this to simplify the allocation.

For smaller implementation engagements, where the total implementation fee is modest relative to the overall contract value, a company may conclude that the implementation fees are immaterial and defer the entire amount until go-live. This is a defensible position when properly documented, and it simplifies the accounting without materially affecting the financial statements.

The key is documentation. The materiality assessment must consider both quantitative and qualitative factors, and the conclusion must be applied consistently.

Real-World Application

A software company with a proprietary platform signs a five-year SaaS contract with a total implementation value of $6,000. The contract includes both non-complex deliverables and complex source code modifications.

Management evaluates the implementation fees and determines they are immaterial in the context of the overall contract. Rather than splitting the fees between Group A and Group B, the company defers the entire implementation amount until the go-live date, at which point it begins recognition over the remaining contract life.

This approach is simpler, defensible, and produces financial statements that accurately reflect the economic substance of the arrangement. The company documents its materiality assessment and applies the same methodology to similar contracts.

The Bottom Line

Implementation revenue timing is not a single decision. It is a series of interconnected determinations: which services are distinct, what their standalone selling prices are, when the customer receives value, and whether the amounts are material enough to warrant separate treatment.

The companies that get this right build their revenue models contract by contract, with documentation that supports each classification. The companies that get it wrong are building income statements that will eventually need to be corrected.

At Lavoie CPA, we work with software and SaaS companies that need their implementation revenue to reflect how value is actually delivered to customers.

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Financial Planning for HealthTech Companies: Strategies for Success

by Sharai Lavoie | Nov 5, 2024 | Financial Planning & Forecasting, Healthcare, Technology

HealthTech is one of the most dynamic and rapidly evolving industries. Financial planning plays a crucial role in helping companies not only survive but thrive in this complex landscape.

Because HealthTech companies face a wide range of challenges and opportunities, they require customized financial strategies to manage their growth, comply with regulations, and sustain innovation.

Understanding the HealthTech Landscape

HealthTech is experiencing unprecedented growth for several reasons: technological advances, an increased demand for personalized care, and a greater focus on preventive health.

Meanwhile, trends like telemedicine, wearable devices, and AI-powered diagnostics are creating new opportunities—and challenges—for companies. HealthTech companies can remain competitive and innovative by staying on top of current trends.

Regulatory Considerations

Healthcare regulations are constantly changing, and between HIPAA, international standards, and FDA approval requirements, keeping on top of these regulations is more than a full-time job.

HealthTech companies must be proactive. Understanding regulatory requirements and staying on top of changes will help companies design products and services that are legally compliant from the outset, reducing the risk of delays and cost overruns.

Funding Environment

The landscape for HealthTech financing is robust. These companies often receive investments from venture capitalists, angel investors, and strategic partners who want to be on the ground floor of the next smartwatch EKG or AI diagnostic tool.

But securing funding isn’t always easy. It requires a solid business plan, a demonstrable value proposition, and clear pathways to profitability. Understanding each investor’s preferences and criteria can help you tailor pitches and improve your chances of securing funding.

Key Components of Strategic Financial Planning

Budgeting and Forecasting

It’s essential for any business to accurately budget and forecast—but the stakes are far higher in competitive industries like HealthTech. Companies must account for regulatory costs, R&D expenses, and market expansion.

This means you need dynamic forecasting models that adjust to both outside market conditions and your internal company performance. This helps leaders make time-sensitive strategic decisions while enabling your company to adapt to whatever the future has in store.

Lavoie CPA can help with your HealthTech financial planning needs. We’re a direct implementer of Sage Intacct, a leading cloud-based financial management software. Our outsourced accounting services let you seamlessly integrate Sage Intacct into your management software. You’re able to see nearly limitless perspectives of your company’s finances with just a few clicks.

Cash Flow Management

Effective cash flow management is the lifeblood of HealthTech companies. It ensures these companies can meet their financial obligations while also investing in growth opportunities.

This means meticulously tracking revenues and expenses and doing what you can to reduce operational costs. You’ll also need to maintain enough liquidity to weather any unexpected financial challenges. Two essential practices to avoid running into liquidity crises are (1) implementing cash flow forecasts and (2) setting up emergency funds.

Capital Allocation

Strategic decisions on a company’s capital allocation will determine its long-term success. HealthTech companies need to prioritize their investments in high-impact areas like R&D, technology infrastructure, and market expansion. These sectors are the most likely ones to drive sustainable growth.

Companies should also regularly review their capital allocation decisions to ensure resources are directed toward the most promising opportunities. These decisions should be regularly reviewed and adjusted as the company’s strategy evolves.

Risk Assessment and Mitigation

Identifying and mitigating financial risks is crucial. HealthTech companies face unique risks from frequent regulatory changes, technological obsolescence, and market competition.

Developing robust risk management frameworks can help mitigate these risks and safeguard a company’s financial stability. This framework includes conducting regular risk assessments, implementing internal controls, and developing and testing contingency plans.

Funding Strategies for HealthTech Companies

HealthTech companies can acquire funding from a variety of sources. There’s no one-size-fits-all approach here—from venture capital to government grants, the right approach for your business will depend on your needs and goals.

Venture Capital

One of the main sources of funding for HealthTech startups is venture capital (VC). And not only do VCs provide capital, but they can also lend their industry expertise and help companies make valuable connections.

But securing VC funding requires a compelling business model and clear growth trajectory. Company leaders should continually work on building strong relationships with venture capitalists and understanding their expectations. By knowing your target audience, you’ll be able to adjust your pitch and enhance the chances of securing an investment.

Angel Investors

Angel investors can provide early-stage funding and mentorship to HealthTech startups.

Building these relationships, especially with angel investors who have HealthTech experience, can help your company gain early traction and navigate initial market challenges. Angel investors often offer more flexible terms than VCs. They can also be crucial for bridging the gap between the seed stage and larger funding rounds.

Government Grants and Incentives

Many federal and state governments offer grants and incentives to support HealthTech innovation.

It’s important for companies to explore opportunities for non-dilutive funding, which can reduce financial pressure and support critical R&D activities. Keeping track of the grants available and understanding the application processes can help you boost your company’s balance sheet without diluting ownership.

Strategic Partnerships

Companies that form strategic partnerships with established healthcare organizations can gain access to capital, industry knowledge, and market channels. These partnerships can accelerate a new company’s growth and enhance its credibility in the market. Strategic partnerships and collaborations can also lead to shared resources, co-development opportunities, and access to new customer bases.

Financial Metrics and KPIs for HealthTech

Being able to calculate key performance indicators can give you an instant snapshot of your company’s health. Some of the measures you can track using Sage Intacct include:

Customer Acquisition Cost (CAC)

As the name implies, CAC measures the cost of acquiring a new customer. The lower a company’s CAC, the better—and of course, keeping current customers is generally cheaper than acquiring new ones.

By optimizing marketing and sales strategies, HealthTech companies can lower their CAC and improve their profitability. Using platforms like Sage Intacct can help you analyze the effectiveness of different acquisition channels. This will let you allocate your company’s marketing budgets as efficiently as possible.

Lifetime Value (LTV)

LTV estimates the total revenue generated from a customer over their engagement period. A company’s long-term success relies on maximizing LTV through excellent customer service and continuous innovation. Implementing customer retention strategies and offering value-added services can also increase LTV.

Burn Rate

Burn rate measures the rate at which a company spends its capital. HealthTech companies must monitor their burn rate closely to secure enough runway to achieve key milestones and get additional funding.

Understanding your company’s burn rate to cash reserve ratio can prevent you from running into any unexpected financial crises. It will also ensure sustainable growth.

Regulatory Compliance Costs

Complying with healthcare regulations is necessary but expensive.

And because non-compliance can land you in legal hot water and rack up hefty fines, it’s essential to track these expenses closely. You can mitigate your risk of non-compliance by allocating enough resources for all necessary compliance activities and staying updated with regulatory changes.

Balancing Innovation and Financial Stability

There’s never enough funding to do everything; a company’s innovations and investments must be balanced with their need for financial stability.

R&D Investment Strategies

Companies should prioritize projects that have the highest potential for market impact and return on investment. Developing a structured R&D process and regularly reviewing your project portfolio can help you make informed investment decisions.

Scaling Operations Efficiently

Companies must optimize their operational processes to ensure their infrastructure can support growth without compromising quality. Always strive to optimize by implementing lean management practices and regularly reviewing and improving your processes.

Managing Intellectual Property

Protecting intellectual property (IP) is another crucial task. HealthTech companies must invest in robust IP management strategies to safeguard their innovations and stay competitive. This includes securing patents, trademarks, and copyrights and tracking potential infringements.

Exit Strategies and Long-Term Planning

Once your company has begun to enjoy some success, it’s time to make an exit plan. Even if you’d like to stick with this company for a while, it’s always good to have options at your disposal.

An initial public offering (IPO) can give HealthTech companies both capital and visibility. Preparing for an IPO involves rigorous financial planning, regulatory compliance, and strategic positioning. Companies must ensure their financial statements are audit-ready and their governance structures are robust enough to meet the market’s expectations.

Meanwhile, long-term sustainability requires a focus on continuous innovation, financial prudence, and market adaptation. Regularly reviewing and updating your company’s strategic plan will ensure it remains agile and can adapt to changing market conditions.

In Closing

Effective financial planning is the cornerstone of success in HealthTech, and having an expert by your side is one of the best ways to keep track of your financial metrics. At Lavoie CPA, we understand the unique challenges and opportunities in HealthTech, making us a go-to financial partner for companies at all stages of growth.

As this sector continues to evolve, companies that prioritize robust financial planning will be well-positioned to capitalize on emerging opportunities and drive industry innovation. Give Lavoie CPA a call or contact us to start the conversation.

Women Who Lead: Caitlin Sellers Castevens with Carolina Women in Tech

by Sharai Lavoie | Jun 25, 2021 | Community, Technology, Women Who Lead

Each #WomenWhoLead feature will be showcased on a wall mural in South End Charlotte. If you know a woman leader who you want to feature on the wall, please click the button to nominate her.

Nominate a Woman Leader Now

It’s hard to think of someone more plugged into the cause of advancing women in technology than Caitlin Sellers Castevens.

Castevens is one of three co-founders of Carolina Women in Tech, a non-profit membership group that “embraces the role that technology plays in [any woman’s] career, business, and life.” She’s also the co-host of the podcast Lady Tech Charmers and recently partnered with a non-profit called She Flew the Coop, rolling out a podcast series about “Waking the flock up,” getting out of your comfort zone, and going after your dreams.

“I think the flexibility of the tech industry and the fact that it is ever-changing — it brings the playground to an even more even playing field regardless of your age,” says Castevens. “If you’re willing to put in the work, get the education, learn the skills, and keep up with the industry, it allows a variety of generations to be able to gain success in the tech industry.”

We talked more with Castevens about her start in technology and her journey to becoming an impassioned community leader.

When did you become interested in technology?

I’ve always loved technology. I worked in IT staffing right out of school for a little bit, and I always thought it was weird that there weren’t a lot of women, there weren’t a lot of BIPOC or openly LGBTQ people. Even people who identify with the fact that they were in technology had to have this really finite skill set. For example, if they were a coder or they were doing quality assurance for tech specific product development then they considered themselves technical but people in education, health care, and blue collar workers didn’t (and still don’t) often identify with being in tech.

It was and still is a very very technical, male-dominated field, and I was like, wait a second, I’m in marketing. I work with a lot of women who use a lot of technology tools. Why aren’t we identifying with being in technology? And so I started asking those questions like, “What does it actually mean to be in the technology field?” And that’s when the [Lady Tech Charmers] podcast and the [Carolina Women in Tech] non-profit as well as other diversity, equity, inclusion, and belonging community initiatives started to form.

Why do you think there aren’t more women in technology in the Carolinas?

I think there are a lot of women who don’t realize they’re in technology. Even if you look at teachers. Teaching is a very female-dominated field. They’re using technology every day. Think about this pandemic. [Think about] Zoom, and email, and slack, and videos, pre-recorded videos, audio, online homework assignments — this is all technology. It’s become a table stake in careers across the spectrum. We use technology with everything. So if you’re a female and you are in the workforce, there’s a very good chance that you’re embracing tech in your career.

So it sounds like the definition of what it means to be in technology is a much broader definition than simply being a technical coder or big data analyst, for example.

If you embrace technology in your career, and you specialize in a particular field of technology, then you become a facilitator of technology within your organization.

Say you have this office administrator [in the construction industry] who is implementing BuilderTrend, which is an industry-specific project management tool. She is not technically a woman in tech, but she’s using QuickBooks Online, she’s activating BuilderTrend and setting it up, integrating the bookkeeping tool with a project management tool. She’s doing all the invoices using this technology. She’s helping the superintendent and the project managers get [data] on their phones and learn how to input information on their phones when they’re out in the field. That’s a woman in tech. Even if she’s not technically a programmer, that doesn’t make her any less valuable as a facilitator and user of technology.

Community seems to be a central cornerstone of your mission to advance women in technology. Do you have a personal story in which the value of community was really solidified for you and points to why you continue to be involved in so many communities?

hen I was trying to network and build my business as I was getting started as an entrepreneur in 2013, I got involved with the Plaza Midwood Merchants Association, because I live in the neighborhood and I wanted to get involved with the local business owners. So they brought me in to help them update their website and simple things like Facebook groups. And that was all fine, well, and good, but where I saw the biggest need was being able to serve the schools that were in our area.

I thought, “How can I make a difference with some of our neighborhood schools?” I decided to plug in with one of the leadership teachers at Garinger High School, and we brought some business owners together and created a speed mentoring event. We had 30 students, 10 volunteers at Advent Coworking. Common Market provided lunch. And it was a huge success. We started out simple and organic.

And then we got incredible feedback from students, teachers, and community members. We agreed that, “This is awesome. We should do one better next year.” So we turned this small group networking event into [the Charlotte Student Entrepreneur Summit], which, over the course of three years turned into this huge conference with 150 plus people, five Charlotte Mecklenburg Schools, tons of businesses, nonprofits, leaders, city council — a lot of big people showing up for these students at these at-risk high schools.

And we were able to bring the technology field to the forefront. We were able to show [students] different opportunities and connect students to specific people for mentoring and intern opportunities and looking at their resumes and helping them upskill in different areas.

Wow. That’s incredible. Growing a small networking group into a large summit takes vision. It also seems like it takes a willingness to build and serve a community.

It was a lot of little things, you know, and that really is what community is all about. It’s a million little things. A million connections, a million touchpoints, a million opportunities and connections, a lifetime of resources and relationships.

A lot of entrepreneurs make the mistake of networking for personal gain. And I think if they switch their mentality from this sort of armored leadership approach to this daring leadership approach — with an open heart and an open mind — and just looking to share their gifts with the world, and look to connect other people with their connections, or in so many words- seeing the greater good and taking action to make a positive impact on the world. Having that mindset of seeing the greater good and helping people see what’s possible.

That’s really what we’ve done with Carolina Women in Tech. We’ve had conversations with women in all different types of industries, and at the end of the day they have a light bulb moment and often end up responding, “Oh! I am a woman in tech.” It’s cool to see our members and sponsors own that and lean into that more.

What are you especially proud of?

The student Charlotte Student Entrepreneur Summit is pretty high up there and something that I’m proud of. It was purely volunteer work, I made no money but the reward is priceless! It is a repeatable, scalable project that we’re actually exploring being able to implement in more urban and rural areas across the Carolinas as well as in other regions for other school districts. So it was, it was a hard project and a labor of love that is actually kind of evolving into other opportunities for making change and doing good.

What’s next for you?

My husband just started his construction business Midwood Homes, LLC, so we have a new business adventure. I’m also a big gardener and plant lover, so I’m trying to figure out how to incorporate my love of plants and gardening into my entrepreneurial endeavors.

I’m also looking for ways to use technology to create a better customer experience for our construction business because construction is kind of an old school, good old boy kind of industry and so the way that they do business is kind of like that. I feel like with my experience, my background, being able to change the game of how homeowners experience a contractor, wrapping my head around that. That’s cool and exciting.

What is a new skill you’re learning right now?

I’ve been leaning into a lot of historical optimization projects for my inbound marketing clients at Clariant Creative Agency, and some of the technicalities of recent Google updates lately. But also understanding human design and understanding how people work together, how to read the room, and how to set boundaries and expectations with myself and others. Those are harder skills for me, actually, than these tactical technical skills

For example, how to work with people and how to set yourself up for success. And creating space to perform at your best while allowing peers to do the same. Because if you’re depressed or sad or grieving, or frustrated or if there’s tension in the room, or if there’s any kind of conflict, it’s really hard to do well. Especially in an industry that can be volatile. Marketing, technology — there’s a lot of competition, and it’s really hard to break into the field sometimes. So being able to have emotional intelligence and mental resilience, being self-aware, and understanding yourself and other people. Leading with compassion and empathy are skills I still practice daily. I will always be a student, both in tech and with people.

Sage Intacct’s 6 Key Performance Metrics For Subscription Businesses [INFOGRAPHIC]

by Tara Fusco | Oct 29, 2020 | Revenue Recognition, Sage Intacct, Technology

How Healthy Is Your SaaS Business? These 6 Metrics Will Help You Figure That Out

As a Sage Intacct certified accounting and implementation firm, Lavoie CPA is excited to share the latest findings for SaaS businesses to become successful in 2021.

From startups to organizations ready to scale each one of these indicators is an invaluable piece of information to evaluate your company’s overall health — not to mention prep you for that looming board meeting in the near future.

In this infographic we will dive into why each of these metrics is the difference between getting your next round of funding, scaling year over year, or hitting the wall.

Get the infographic and learn why you should care, how to calculate, and an interesting fact about the following KPIs:

CARR (Committed Annual Recurring Revenue)
CAC (Customer Acquisition Cost)
CLTV (Customer Lifetime Value)
Churn
Free Cash Flow
CCS (Cash Conversion Score)

DOWNLOAD THE INFOGRAPHIC