Money Matters

Recession: 5 financial planning tips every SaaS CFO needs

Financial planning can feel like spinning plates on sticks even during the best market conditions. Here are our top tips to successfully plan for a recession.

woman taking notes at desk while working

Financial planning can feel like spinning plates on sticks even during the best market conditions. There’s so much to keep up in the air, and if things fall, they certainly won’t fall gently. And when the markets turn against you during a recession, this feeling of fragility and anxiety can intensify. Here are our top tips to successfully plan for a recession.

In this article we cover:

  1. Perform a financial plan for your SaaS business
  2. Use best practices to hire employees during a downturn
  3. Be honest with yourself and your team
  4. Rough markets? Automation can help
  5. Confidently manage SaaS FP&A with Sage Intacct

1. Perform a financial plan for your SaaS business

As a SaaS CFO, financial planning and maintaining your company’s financial momentum despite poor economic conditions is a tall order. Making these changes will help keep your plans on course: 

  • Make picture-perfect hiring calls: Hiring employees for your SaaS company during a downturn doesn’t have to be complicated. Cloud-based accounting methods can help you obtain clarity, spend intelligently, and enjoy vital peace of mind about your hiring decisions.
  • Keep yourself from overcorrecting: Finance leaders sometimes sway too far in one direction or the other in their decision-making during recessions. When financial planning, some CFOs may get locked into rigid financial conservatism, while others double down on aggressive profit-driving attempts. Automation can show you where you stand financially, so you stay balanced.
  • Run in-depth risk and benefit calculations: Modern accounting software can help you get a granular view of the present and likely future performance of your services and products, including budget versus actuals. What’s working and what’s not? When the markets go sour, having a way to seamlessly access this info can save finance teams significant amounts of time and money.

So, without further ado, let’s get into some concrete steps you can take—using SaaS KPIs—to help your company secure and maintain a strong market position despite the downturn.

2. Use best practices to hire employees during a downturn

When things start to slow down with the broader economy, it can be tempting to try to solve the problem with aggressive hiring measures. After all, more staffing must inherently produce more results, right? 

Not necessarily. Rushed or aimless hiring can stretch your resources dangerously thin during a time when you need to act with more forethought and care. 

Adopting automated accounting software will allow you to hire with precision so that you don’t waste funds by overstaffing. You also avoid being too conservative, lacking the necessary human capital to achieve your desired outcomes.

During a market downturn, financial planning is important because it can help you:

  • Be extremely specific about your goals: For optimal SaaS recession hiring, you should be 100% clear about the nature of the role(s) you’re trying to fill. With automated forecasting, you can make pinpoint projections to guide your decisions. We mentioned before that many companies hire blindly. In contrast, think of automation as hiring through a microscopic lens.
  • Know your results ahead of time: Goal specificity is essential when hiring new employees. But automated accounting software allows you to go further and make detailed “if-then” forecasts for all hiring scenarios. Sage can help you remove almost every ounce of uncertainty from the hiring process. 
  • Get a well-rounded view: Consulting other members of your company’s leadership is always a solid idea before committing to any hiring decisions. They’ll be able to fill you in on potential staffing shortages you might not be aware of and give you a fresh perspective on the best path forward for new hires. Your company’s CMO, VP of Sales, and others in leadership roles would be well worth speaking to. 
  • Watch your KPIs: Monitoring your metrics is also an excellent way to round out your hiring view. Sage can give you a detailed automated KPI reading almost instantly.

There’s more to recession financial planning and analysis (FP&A) than hiring, though. Let’s move on to some of the internal best practices you should consider. 

3. Be honest with yourself and your team

One of the hardest lessons to learn in business is that sometimes you have to let ideas go. Not every brainchild that gets an official rollout is going to be a star, and many won’t even come close. 

For SaaS CFOs, knowing when to pull the plug on certain product and service offerings can make all the difference. During a recession, maximizing the effectiveness of your resources becomes extraordinarily important. A significant portion of that involves realizing when it’s time to stop throwing good money after bad. 

Here are a few useful points to follow in your recession FP&A decision-making: 

  • The 25% rule: If a product or service rollout has taken 25% longer than initially predicted or exceeded your budget by 25%, it’s probably time to call it quits. Also, note that the percentage points with this rule aren’t set in stone. Some SaaS CFOs are more conservative and might end things at the 15% mark or be more forgiving and go to 30%. 
  • Your customers aren’t enthralled: In some ways, customer satisfaction is pretty straightforward. People are buying, or they aren’t. But in another sense, it’s a bit more complex. With a recent rollout, how much time do you give a product or service to improve its performance? Accounting automation can help you run in-depth forecasting scenarios to remove the guesswork from questions like this.

Let’s take a closer look at why forward-thinking SaaS CFOs are leveraging automation to help them optimize their recession FP&A.

4. Rough markets? Automation can help

A cloud-based accounting suite can turn a disorganized, manually run finance department into a streamlined operation virtually overnight. Especially when broader market conditions start to get a little turbulent, SaaS accounting leaders are turning to an automated approach:

  • It’s eminently scalable: Accounting automation allows your finance operations to easily scale at the same pace as your company’s growth. Any disunity between those 2 can result in significant operational complications that are best avoided at all costs.
  • Everything leaders need on one screen: Role-based dashboards allow SaaS CFOs, Controllers, and other finance leaders to get a consolidated view of all the data they need for their respective roles. When the markets turn against you, you can’t afford to waste time and money tracking down all the info you need. 

Looking for ways to thrive during the recession? Accounting automation is your best path forward.

5. Confidently manage SaaS FP&A with Sage Intacct

Has the recession put you on your back foot recently? Regain your confidence and propel your business forwards with Sage Intacct. With its dynamic reporting and financial-planning capabilities, your finance team can easily handle the increasingly important FP&A needs of your business. 

To see how easy it is, explore how our SaaS metric and subscription analytics software can help.

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