People & Leadership

How to best work with your Board of Directors: Tips and tools for SaaS CFOs

Do you have the tools you need to make every board meeting efficient and productive? If not, we can help.

Board management is something all SaaS CFOs have to deal with, so it’s worth taking the time to get it right.

What does your board of directors expect of you, and how can you most effectively measure your progress in that direction?

Just as importantly, do you know what to avoid at board meetings and what red flags to watch out for? 

In this article, we’ll set you up to manage your board successfully and build a profitable working relationship.

What that looks like depends on whether your organization is backed by private equity (PE) or venture capital (VC) funding.

Here’s what we’ll cover

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For SaaS CFOs, board management differs based on context

Your board members will have different strategic goals you’ll need to meet depending on whether you’re dealing with a PE or VC organization.

SaaS CFOs must be attuned to these nuances because an effective board meeting boils down to two primary factors:

  1. What you choose to communicate
  2. How you choose to communicate it

As we’ll see, the best approach to point number two remains the same regardless of whether you’re at a PE or VC SaaS company.

(Hint: it involves transparency and storytelling.)

But there are subtle differences in what you need to communicate to your board, depending on which type of company you’re at.

What does a PE board want to see?

In both PE and VC board meetings, you’ll want to kick things off at a high level and then drill down into specifics.

Don’t dive straight into the profit and loss statement and get lost in the weeds with a barrage of follow-up questions. Start with your metrics and work your way into denser topics. 

For PE SaaS CFOs, some of the KPIs you’ll want to focus on include:

Customer acquisition cost

Your customer acquisition cost (CAC) should be front-and-center because it shows board members how much sales resistance you’re encountering.

PE board members want to see a consistently low CAC because it signals that people are drawn to your product, and just as importantly, there’s more capital available for business reinvestment.

Recurring revenue

Annual and monthly recurring revenue (ARR and MRR) are highly important to a PE company’s board.

In addition to padding the company’s bottom line, a strong ARR and MRR show your board of directors that the financial strategies you’ve been implementing are paying off.

CAC to CLV ratio

Your customer lifetime value (CLV) tells you the average amount of money each customer spends with you before they churn.

In addition to expecting a low CAC, a PE board of directors will want that matched by a high CLV.

Your company’s CAC to CLV ratio offers an important snapshot of your financial health.

A large part of successfully managing your board lies in your method of presentation. How you approach conveying your metrics and other financial data to board members is key to a board meeting’s success.

Visualize your data in board meetings

When you present to your board, you want to give them the clearest possible picture of what’s happening at the company.

For SaaS CFOs, data visualization and financial storytelling are the best ways to achieve that. 

SaaS companies deal with massive amounts of financial data, and it’s almost impossible to weave it into a cohesive narrative without some way to visualize it.

In SaaS finance, data visualization involves using AI software to turn your dry financial data into role-based dashboards, pie charts, line and bar graphs, and other visual aids. 

Using organized and compelling images to convey your points will help you tell a cohesive financial story instead of just putting numbers on a screen.

However, data visualization isn’t the only way to reach mutual clarity with your board.

You also need to take the time to understand where they’re coming from.

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Understanding your PE board

To formulate winning business strategies as a SaaS CFO, you have to understand your board’s frame of reference in detail.

That means asking some questions.

What is the board’s investment thesis?

You need an in-depth understanding of your board’s investment thesis.

Without knowing their exact plan to generate returns, you won’t be able to tailor your strategies to their expectations and specific needs.

What will growth look like?

Does your board want to focus on inorganic growth through mergers and acquisitions (M&A) or aim for organic growth?

As with their investment thesis, knowing their plans and preferences around growth will help you craft appropriate strategies.

Where will M&A come from?

You also need to know what form M&A activity will take. Is your board envisioning vertical expansion or vertical penetration? 

If you don’t know the answers to these questions, take the time to nail these things down.

As the CFO, it’s essential that you understand where your board is coming from.

Keeping your VC board happy

What about VC board meetings? As with PE boards, you’ll want to focus on revenue, EBITDA, and your SaaS KPIs.

However, there are a few contextual differences to keep in mind. 

When presenting to a VC board, you’ll want to hone in on the following:

  • Sales and marketing spend
  • CAC payback period
  • Customer retention
  • Consistent top line growth

One of the core questions a VC board will ask is, “Are we on track for our next funding round?”

Your board wants to know that you’ll be able to hit your funding objectives across your company lifecycle.

A red flag to watch out for

Whether you’re the CFO of a PE or VC SaaS company, one thing should never happen in a board meeting.

You never want your board to have to get involved in tactical matters.

Tactics are for you and the CEO; your board wants to worry about corporate governance, their exit path, and high-level strategic matters rather than the company’s day-to-day. 

Before we wrap up, we’ll discuss three best practices for your next board meeting.

Best practices for your next board meeting

1. Prioritize transparency with your board

A good rule of thumb for the board-CFO relationship is to keep your board “over-informed.”

If a problem is brewing, you might be tempted to sweep it under the rug, thinking you can handle it before it boils over. 

That represents a glaring lack of transparency.

Always be forthright with your board, especially when the news is less-than-pleasant.

Transparency is the foundation of a productive relationship with your board and will help them see you as someone they can trust.

2. Show up with solutions, not questions

When monthly or quarterly board meetings roll back around, be the person who shows up with a plan.

Your board is counting on you and the CEO to be problem-solvers who can drive long-term revenue growth.

When you attend board meetings with solutions in tow rather than a laundry list of questions, you’re more likely to be seen as a high-caliber leader.

In addition to being prepared with solutions, go the extra mile and draft a pro and con list for each of them.

3. Give them more than numbers

This point bears repeating. You’ll lose your audience in board meetings if you simply display numbers on a screen.

Your board won’t be engaged and will likely struggle to form a cohesive business narrative for the prior month or quarter.

Most people think in terms of images and stories much more easily than numbers.

Leveraging role-based dashboards and other financial storytelling methods immediately gets everyone on the same page for effective board meetings.

Get the board management strategies you need

As much as we’ve covered here, it’s just the tip of the iceberg. Want to learn even more about vital topics like this?

On June 5th, 2,000+ SaaS industry leaders, investors, and experts digitally gathered at the Modern SaaS Finance Forum to discuss board management and other core aspects of SaaS finance success.

Hosted by Sage Intacct, the conference had three different learning tracks consisting of 20-minute sessions for CFOs, controllers, and RevOps managers at SaaS, AI, and high-tech companies.

We’ve made each session digitally available, so you can listen to as many or as few as your schedule permits.