Auto-Accruals & SaaS Metrics

Stop running prepaid amortization, deferred revenue releases, and accrued expense entries by hand every month. Kantivo schedules them once, posts them automatically, and tracks the SaaS metrics investors and operators actually care about.

Overview

Accrual accounting matches revenue and expenses to the period in which they're earned or incurred — not the period the cash moved. That's the GAAP-correct way to read profitability, but it also creates a monthly chore: someone has to compute the amortization schedules and post the entries. Auto-accruals are how Kantivo takes that chore off your plate.

You configure each accrual once — the dollar amount, the period it covers, the GL accounts to touch — and Kantivo posts a slice every month for the life of the schedule. The same engine powers Kantivo's live SaaS metrics: MRR, ARR, burn rate, and runway, all derived from your actual ledger without spreadsheet maintenance.

Accrual Types

Kantivo supports three families of automated accruals:

Each one produces a balanced double-entry journal entry per period. The schedule, dollar amount, accounts, and posting cadence are configurable.

Prepaid Expenses

You paid for an annual insurance policy in January for $12,000. Under accrual rules, $1,000 of that hits expense every month for 12 months. Without auto-accruals, you'd post 12 manual entries; with them, you set it up once.

Setting Up a Prepaid Expense

1. When recording the original payment, route it to a Prepaid Expense asset account (e.g., 1400 Prepaid Insurance) instead of straight to expense
2. Open Auto-Accruals → New Accrual
3. Pick Prepaid Expense
4. Set:
   • Asset account — where the balance sits (1400 Prepaid Insurance)
   • Expense account — where each period's slice posts (e.g., 6200 Insurance Expense)
   • Total amount ($12,000)
   • Start date and end date
   • Frequency (typically monthly)
5. Save

Each period, Kantivo posts:

Deferred Revenue

The mirror of prepaid expenses. A customer pre-paid for a year of service in January for $12,000. Revenue gets recognized $1,000/month over the service period, with the unearned balance sitting on the balance sheet as a liability.

For full deferred revenue handling — including multi-obligation contracts and ASC 606 disclosures — see Revenue Recognition. The simpler single-stream case can also be handled directly inside Auto-Accruals.

Setting Up a Deferred Revenue Schedule

1. Route the original payment to a Deferred Revenue liability account (e.g., 2400)
2. Open Auto-Accruals → New Accrual
3. Pick Deferred Revenue
4. Set the liability account, the revenue account, the total amount, the period, and the frequency
5. Save

Each period:

Recurring Accruals

Expenses incurred this period but paid later — your January utility bill that won't arrive until February, the monthly rent that posts on the 1st but is technically earned by the landlord over the previous month, or a sales commission earned this period but paid next period.

Setting Up a Recurring Accrual

1. Open Auto-Accruals → New Accrual
2. Pick Recurring Accrual
3. Set:
   • Expense account
   • Accrued liability account (e.g., 2300 Accrued Liabilities)
   • Amount per period
   • Frequency
   • Auto-reverse toggle — if on, the entry reverses on the first day of the next period (standard practice)
4. Save

Each period:

With auto-reverse on, the entry reverses on the 1st of the next month. The real bill then posts normally and the books balance without double-counting.

SaaS Metrics

Kantivo computes the metrics that operators and investors look for, derived from your ledger in real time. No spreadsheet, no separate dashboard, no quarterly reconciliation chore.

Access SaaS metrics at Reports → SaaS Metrics (or from the dashboard if you've pinned the card).

MRR & ARR

Monthly Recurring Revenue (MRR) is the normalized monthly revenue from subscription customers. ARR is simply MRR × 12.

Kantivo computes MRR from your active subscription contracts (or recurring invoices, depending on how you've set the data up) and recognizes the right slice each month through deferred revenue or recurring invoicing. The dashboard shows:

• Current MRR and ARR
• Month-over-month change ($ and %)
• New MRR, expansion MRR, contraction MRR, and churned MRR for the period
• A 12-month trend line

Burn Rate & Runway

Burn rate is your average monthly net cash outflow. Runway is current cash balance divided by burn rate — how many months you have before zero, all else equal.

Kantivo computes both from your bank balances and historical net cash flow:

• Gross burn — total monthly cash outflow
• Net burn — outflow minus incoming cash from operations
• Runway — cash on hand ÷ net burn (capped at 36 months for display purposes)
• Trend chart — runway evolution month over month

When net burn is negative (you're cash-flow positive), the dashboard shows "Cash Flow Positive" rather than a runway number.

Getting Started

1. Add the supporting accounts to your Chart of Accounts if they don't already exist:
   • Prepaid Expense (asset, e.g., 1400)
   • Deferred Revenue (liability, e.g., 2400)
   • Accrued Liabilities (liability, e.g., 2300)
2. Set up your first prepaid against an actual prepayment you already have on the books
3. Review the generated schedule — every future entry is visible before any of them post
4. Let it run for a month, then check the resulting journal entries
5. Open SaaS Metrics to confirm MRR, ARR, burn, and runway look right

FAQ

Can I edit an accrual schedule after it's running?

Yes — but only future entries are affected. Already-posted entries stay as they posted; you'd need to reverse them manually if a correction is required. Most edits (description, end date extension) don't disturb posted history at all.

What happens if I delete an accrual?

Future scheduled entries stop. Already-posted entries remain in the ledger; Kantivo doesn't retroactively undo posted history. The audit log records the deletion with your user name and timestamp.

Can accruals post automatically or do I have to approve each one?

Both are supported. Per accrual, choose between auto-post on schedule or hold-for-approval. Auto-post is the right default for stable, predictable schedules (insurance, rent); approval-required is right for newer or larger schedules where you want eyes on each entry until you trust the configuration.

Do MRR and ARR include one-time fees?

No. Only recurring revenue contributes to MRR/ARR. One-time setup fees, professional services, and other non-recurring revenue stay in your overall revenue total but don't move the MRR needle.

Why is my runway showing "—"?

Most commonly: you don't have enough cash-flow history yet. Kantivo needs at least one full month of activity to compute a meaningful burn rate. Once you have a couple of months of data, runway populates.