Strategy, Legal & Operations

Can your financial reporting and forecasting win your market?

Streamline financial reporting for your business with our efficient solutions. Discover the latest techniques and best practices on our blog.

Today’s SaaS CFOs can’t afford to compromise on their reporting and forecasting. 

The SaaS space is more competitive than it’s ever been, and your role has more professional obligations attached to it than ever before. 

You’re expected to be a strategic contributor on par with the CEO, and that requires robust financial reporting and forecasting.

In this post, we’ll be analyzing 1) Why SaaS CFOs need better reporting and forecasting to stay competitive, 2) The operational risks of entrusting these critical workflows to legacy tools, 3) What your SaaS tech stack strategy should be, and why it’s crucial to have one.

If you’re ready to look at two of your department’s most important tasks in a new light, let’s get started.

Why do SaaS CFOs need better reporting and forecasting?

In one sense, it’s self-evident why SaaS CFOs need better reporting and forecasting. 

You need a clearer understanding of cash coming in and cash going out so you can strategize successfully and win your market.

But that’s not the full story. 

There are trends in SaaS finance that have culminated in making these two workflows the most important they’ve ever been. 

Let’s review them.

Today’s SaaS CFOs have more strategic responsibilities

Gone for good are the days when the CFO role was siloed in the back office and primarily focused on historical transaction data.

As a modern CFO, you have a key role to play in driving subscription revenue with market-winning growth strategies. 

You’re also counted on to aid your SaaS organization in surviving tough economic times, experimenting with different pricing models, and much more.

Furthermore, if a downturn occurs, what choices will best extend your cash runway and bolster revenue streams? 

Those are the types of questions you have to answer to safeguard your company’s financial health.

As the CFO of an early stage SaaS company, you don’t have the luxury of waiting out reporting lag or slogging through manual forecast assembly. 

You need real-time reporting and forecast data to be able to live up to your important role.

Your job has become much more collaborative

Although it’s always been a crucial role, your job used to be much more siloed than it is now. 

The finance function at a SaaS organization used to be fairly self-contained, but it now touches almost every aspect of company performance in one way or another.

The CFO of a SaaS company can now expect to interface with stakeholders in:

  • Sales and marketing
  • Customer success
  • Product and technology
  • Research and development, and more.

You not only have more strategic responsibilities on your plate, you’re also expected to help a range of other departments and teams execute on theirs.

You’re expected to ensure operational efficiency through technology

As technology has continued to form the backbone of SaaS financial operations, CFOs have taken on the responsibility of process optimization. 

How effectively can your tech stack carry out day-to-day tasks in your department? 

Is your team drowning in manual data entry for report and forecast assembly? 

Are your forecasts too variable to rely on? 

Do you have access to streamlined scenario planning?

You’re counted on to utilize technology in a way that will allow you to take advantage of opportunities and avoid risks.

SaaS is more competitive today than ever, with technological innovation and organizational efficiency going hand in hand. 

As a CFO, it’s your job to use modern tools to ensure the smooth execution of your financial and business operations.

Now we’ll look at how reporting and forecasting are woven into your expanded role as a finance leader.

Your reporting and forecasting play a massive role in your company’s financial performance and profitability. 

And they’re central to every CFO trend we’ve just discussed.

Reporting and forecasting are central to revenue growth and strategy formation

As we discussed, CFOs in the SaaS industry are now expected to drive revenue growth, expand the customer base, craft pricing and retention strategies, and generally play a strategic role.

Financial reporting is your starting point in all of this. 

You need reliable reports that feature integration with key metrics to deliver full transparency and visibility into the health of your SaaS business.

Once you have accurate reporting data, you can decide on benchmarks to aim for and get to work forecasting different scenarios to hit those goals. 

But it all starts with those two workflows.

Forecasting and reporting are central to your role’s new collaborative and technological aspects.

Whether you’re discussing quarterly budgets with other departments or fielding strategic questions from another stakeholder, you need to ensure that everyone has central access to reports and forecasts to get on the same page.

Reporting and forecasting are also incredibly important areas for delivering on your responsibility for ensuring technological innovation. 

Naturally, these two workflows tend to be at the core of SaaS success, so you need to use technology in a way that delivers the most robust reporting and forecasting possible. 

If your tech stack isn’t delivering in these areas, you’re falling short of your professional obligations.

Luckily, all it takes is the right tech stack strategy to start doing business like a modern SaaS CFO.

Why should you have a tech stack strategy, and what should yours be?

Often, SaaS CFOs don’t take the time to create a tech stack strategy. 

This is unfortunate since knowing what you want is the best way to steer clear of what you don’t want. 

That’s why many SaaS finance leaders find themselves using legacy tools that can’t deliver the caliber of reporting and forecasting they require. 

They didn’t stop and plan for their needs.

Below are some of the most critical elements to include in your tech stack strategy to enable superior forecasts and financial reports.

Aim for an integrated accounting solution

Tech stack integration–especially with cloud-based software–saves time and money and prevents downstream problems such as compatibility issues between apps.

Look for an integrated finance tech stack that accommodates the full scope of your department:

  • Reporting and forecasting
A role-based SaaS dashboard.
  • Payables and receivables
  • SaaS billing and touchless invoicing
  • Billing model flexibility, rev rec, and more.

By integrating your tech stack, your department will run more smoothly and you’ll likely see a decline in manual errors–including in reports and forecasts–as employees stop jumping between different apps to do their work.

Don’t compromise on centralized, real-time reporting

For modern SaaS CFOs, it’s very important that your reporting data be centralized and updated in real time. 

This enables financial reporting that instantly reflects changes in your environment as well as the distribution of that data to the right people when they need it.

On top of that, make sure your tech stack provides access to all the SaaS metrics your finance team needs for success.

Prioritize algorithmic forecasting and scenario planning

The ability to quickly answer hypothetical questions is often what sets top SaaS companies apart. 

Some of these might even come from other stakeholders and could include:

  • If we adopt a hybrid billing model, what impact will different pricing structures have on our annual revenue?
  • If a recession hits, do we need to make headcount adjustments? If so, where and how?
  • If we retool our marketing funnel to focus on different prospect types, what impact might that have on next quarter’s sales?

These are all questions you would answer through forecasting. 

If you’re using legacy tools, you’d need to assemble a fresh forecast for every changing assumption in every single question.

An automated SaaS forecast.But with automated SaaS forecasting, you can test each scenario by just changing your starting data and clicking a button. 

No more spreadsheets, broken formulas, or forecast assembly email chains.

RELATED: 5 Ways Finance Teams Can Improve Their SaaS Forecasting Results and Profitability

A finance tech stack tailored for early stage SaaS companies

For SaaS CFOs at early stage SaaS organizations, your choice of tech stack–and its impact on your reporting and forecasting–is especially crucial.

In addition to stepping up to your expanded professional obligations, you’re tasked with helping your company carve out market share and recurring revenue in a highly competitive industry.

Sage Ahead is a tech stack custom-built to help you do exactly that. It’s a fully integrated finance tech stack packed with everything that early stage subscription SaaS CFOs need, including: 

  • Automated reporting and forecasting
  • Touchless invoicing and billing model flexibility
  • AP and AR
  • Centralized revenue recognition.

For today’s SaaS CFOs, the quality of your tech stack and your financial performance are increasingly one and the same. 

To learn more about Sage Ahead, take a free product tour.