If your software business is driven by subscription revenue, SaaS metrics are the core of your KPIs and reporting. These metrics are the foundation for demonstrating your profitability and growth potential. Your historical financials aren’t giving you the whole picture, so what else are you missing without a SaaS metrics solution that allows you to visualize your financial and operational data into actionable insights?
The Power of Granularity
Most SaaS and subscription finance teams are capturing and reporting the most basic SaaS metrics, such as Expansion and Contraction, CAC and LTV, as a yard stick for measuring the overall health of the business finances.
But in order to see precisely where and how to grow the business, you must be able to define what’s working and what isn’t, which is nearly impossible to do with a broad-brush approach or with Excel spreadsheets. For example, “Expansion” is a big bucket that includes a variety of subscription activities that result in the increase of a customer’s subscription value. They might include:
- Price Uplift
- Foreign Exchange gains on multi-currency subscriptions
Similarly, “Contraction” can hide the more granular events that led to a decrease in a customer’s subscription value, such as:
- Price Markdowns
- Foreign Exchange losses
What you can’t see in your high-level SaaS reporting is the reason driving the trends in your customer behavior. For example, can you see the difference between who’s adding to their subscription versus who’s downsizing their subscription versus who’s un-subscribing altogether? Can you see how much it costs to acquire a customer, which customers and product lines are the most and least profitable, by industry, so that you can adjust your sales and marketing strategies to optimize results? These are the types of questions requiring more complex metrics such as CMRR, ARR, CAC, LTV, Renewal Rates, and Churn that SaaS organizational leaders and investors are demanding and expecting.
Excel Won’t Support You at Scale
For a start-up, spreadsheets can get you started when your metrics are pretty lightweight. But as your organization continues to scale-up, the enormous time burden on your Accounting and Finance teams will reach a point of diminishing returns. The enormous amount of time your teams will have to spend exporting, aggregating, and preparing the necessary data from your financial system, populating countless spreadsheets, managing and correcting formulas, and verifying calculations just to create their monthly reports will have them running for the door.
Worse yet, after all that work and all those hours, the metrics are out of date the minute they’re published, making them far less valuable and nearly impossible to rely on when your leaders need make swift, data-driven decisions. There is no scalable way to achieve “real time” access in Excel; everything is historical. And as you grow, Excel will continue to become more cumbersome, inflexible, lacking-in-granularity, and more error-prone.
The Confidence You Need
The missing piece of the picture is what inspires confidence from your Executives and Investors. Ideally, you need to analyze and display subscription details across modules, interweaving and interpreting your data continuously to give you the full picture. With your SaaS metrics automated by AcctTwo SaaS Intelligence, you’ll be able to:
- Automatically analyze and categorize every transactional event and its related recurring revenue impact at an unmatched level of detail
- Seamlessly link SaaS entries to the transactions that created them for easy drill-down and auditing
- Easily leverage native Sage Intacct reporting features to generate your own custom KPIs, Performance Cards, Reports, and Graphs
- Instantly enable you to create your own dashboards based on financial data inside Sage Intacct that your whole team can access from any secure device they prefer from anywhere they have Internet access
If it’s time to leave Excel behind and clearly see your SaaS metrics. enabling you to accelerate growth or reduce loss, click here to take a Coffee Break Demo of Sage Intacct.