SaaS finance leaders face an array of daily choices that can feel overwhelming. Between the endless billing and pricing options you have, your reporting and forecasting responsibilities, and everything else, sometimes it just gets to be too much.
Luckily, there’s one choice for SaaS CFOs that’s much less difficult. When faced with the option of manual processes or automated workflows, which direction do you take?
This article will clue you in on the benefits of automation. When it comes to shedding manual workflows, practically no one stands to benefit more than SaaS CFOs.
The Ripple Effect of Manual Processes
Manual processes are hazardous for SaaS organizations because they tend to creep into every aspect of your company once you’ve made room for them at all.
This is because recurring revenue companies rely on an interwoven stream of financial processes.
It’s such an insidious problem that Gartner cited an average of 25,000 hours and $878,000 lost each year on manual, error-prone prone work that has to be redone.
Let’s examine the impacts of this ripple effect one by one.
Slow and Inaccurate Reporting
Manual reporting can be a serious sticking point for finance departments.
Manual reports based on spreadsheets expose software companies to multiple liabilities, including:
- Delayed reports because data is not freely available at all times
- Reporting inaccuracies from manual processes and data silos
- Cash shortfalls from operating with flawed data
However, reporting is hardly the only aspect of your department that will suffer from the ripple effect of manual processes.
Incomplete Forecasts with High Variance
Next to reporting, forecasting ranks as one of the highest-value responsibilities of any SaaS CFO.
Manual forecasts can be error-prone, have a relatively short time horizon, and rely on cumbersome and costly manual processes to assemble.
Beyond that, accounting departments rely on forecasts for all forward-looking plans and projections: predicting customer behavior, planning pricing rollouts, and many other tasks.
Manual processes around forecasting introduce high variance. This means the distance between your forecast and reality will be much larger than if you automated your forecasting.
Lack of Internal Clarity on Metrics and Goals
Using manual processes to gauge your SaaS metrics can interfere with your firm’s productivity and profitability.
An automated cloud-based accounting suite gives teams much more flexibility around metrics and KPIs:
- SaaS metrics are accessible at any time and are updated continuously
- Access revenue metrics, customer behavior metrics, and many other crucial datasets
- Role-based SaaS metrics dashboards allow finance leaders to see the most relevant metrics for their specific role
- Metrics are visible across departments through a single source of truth (SSOT)
For SaaS accounting departments–and finance leaders in particular–metrics are simply too important to leave to manual processes.
Significant Levels of Wasted Time and Capital
When you rely on manual processes, time and capital are often wasted on busy work.
Whether it’s emailing report data back and forth, working on the monthly close, or something else altogether, manual workflows tend to introduce inefficiencies.
Automation helps companies make the most of their human capital and financial resources.
AI and Machine Learning for SaaS CFOs
AI and machine learning (ML) have become mainstays in many SaaS accounting departments. They allow teams to maximize their effectiveness and avoid many of the drawbacks we just discussed.
Let’s examine some specific benefits that finance leaders are taking advantage of.
Accuracy Through Automation
When discussing human error from manual processes, CFOs almost always revert to the same four offenders:
1. Reporting: Between manual spreadsheet entries, data-gathering email chains, and post-assembly edits, manual processes in your financial reporting can produce errors and inaccuracies.
2. Forecasting: Putting together an accurate, long-range forecast from scratch involves a complex string of headache-inducing tasks. With automated forecasting, you just plug in your starting data and click a button.
3. Billing: As you scale, the risk of accuracy problems in your billing grows exponentially if you rely on manual processes.
4. Revenue recognition: SaaS revenue recognition relies on large amounts of data reliably updating in sync. AI eliminates the need to use manual processes for revenue recognition, ensuring complete accuracy around revenue reporting and deferred revenue waterfalls.
Let’s look at a real-world example of how AI can significantly streamline accounting productivity.
From 100 Hours to Mere Minutes
Halstatt, a private investment firm, used Sage Intacct to eliminate manual processes and saw just how beneficial AI can be.
Among other improvements, we helped Halstatt:
- Slash report and book consolidations from hundreds of hours’ worth of work to mere minutes.
- Lower their check payment fees from $36 to $4 per check
- Reduce external auditing time to 2 weeks, saving the firm $100,000 annually.
- Increase their overall accounting efficiency by 60%.
By eliminating manual processes, CFOs can streamline key workflows to accelerate their results.
Put Automation to Work in Your Department
Sage Intacct uses financial automation to help SaaS companies shed manual processes.
Between AI and ML, SaaS accounting is experiencing a period of rapid evolution.
To learn more about how you can take charge of your department and thrive amidst these changes, check out our ebook: “Managing Modern Finance in a Time of Unprecedented Change.”
Managing modern finance in a time of unprecedented change
Discover how taking the right steps to modernise accounting management systems will help your business gain insights that will lead to improved productivity and reduced costs, and prepare you for rapid growth.