5 things every RevOps pro should know about finance

As a revenue operator, having a solid understanding of your company’s finance function can help you drive revenue much more efficiently.

In this post, we’ll be covering 5 things every Revenue Operations (RevOps) pro should know about corporate finance.

First, we’ll start with some essential definitions.

Then, we’ll explain why it’s so important for RevOps pros to understand corporate finance.

Here’s what we’ll cover

RevOps and finance: some key definitions

There’s certainly some overlap between RevOps and finance, since both teams share the overall goal of driving financial success for the company.

However, they have slightly different perspectives.

 What exactly is RevOps? In a nutshell, RevOps is responsible for aligning people, business processes, and technology to drive revenue as efficiently and effectively as possible.

What exactly is corporate finance?

Corporate finance, on the other hand, is responsible for processes such as:

• Financial planning and analysis (FP&A), budgeting and forecasting
• Treasury responsibilities, like cash and FX risk management
• Accounting functions like AP and AR, and GAAP/IFRS compliance
• Tax planning and compliance, and tax authority management
• Investor relations, including reports, disclosures, and investor management
• Payroll, procurement, and cost accounting

Essentially, RevOps teams are focused on driving revenue first and foremost, whereas finance teams are more concerned with a company’s broader financial well-being.

Why do revenue operators need to understand corporate finance?

As a RevOps pro, you may not be on your company’s finance team, but you still need a firm grasp of corporate finance.

After all, the RevOps team directly impacts a company’s revenue streams, which are inseparable from its financial health.

On a day-to-day and quarter-to-quarter level, when RevOps pros understand the nuances of corporate finance, their companies tend to achieve better results in their:

• Resource allocation
• Revenue forecasting
• Compliance and governance
• Cash flow management

With that in mind, here are 5 things every RevOps pro should know about finance.

1. Revenue operating model: top of funnel

For revenue operators, visually mapping out the revenue lifecycle can be extremely useful.

For a lot of SaaS and tech companies, the top of the funnel looks something like this:

Here’s a breakdown of that visual:

1. Prospects hear about your company, whether through social media, events, organic search, referrals, or word of mouth.
2. Interested prospects become leads.
3. Marketing qualified leads (MQL) have shown interest, but have only interacted with your marketing materials.
4. Sales qualified leads (SQL) have interacted with your sales team and are more likely to make a purchase.

This data enables businesses to track their cost efficiency ratios — cost per lead, cost per MQL, cost per SQL, and so on.

These directly impact a company’s customer acquisition cost (CAC), as well as its ability to efficiently drive revenue.

2. Revenue operating model: focus on NRR

Now let’s talk about the renewal and expansion side of things. Once you have customers and an existing book of business, then what?

The goal at that point is to keep your net revenue retention (NRR) as high as possible.

In other words, say a customer spends $10,000 with you. Over time, how much of it do you keep?

Are you losing money to subscription downgrades or churn, or is that client renewing and expanding their subscription, generating even more revenue?

NRR is the key to revenue success for any company that has a subscription business model.

You always want your NRR to be greater than 1, because anything less means you’re losing revenue over the period you’re looking at.

3. GTM activities drive financial statement outcomes

As a revenue operator, you need to realize that your team’s activities don’t occur in a vacuum.

GTM activities have a direct and measurable impact on your company’s financial statements.

You can think of it as a matter of inputs and outputs.

The inputs from your marketing team, sales team, and customer success team, all contribute to outcomes — like subscription expansions or renewals — that drive revenue on your financial statements.

However, RevOps leaders also need to be conscious of the other side of the coin: the way those teams’ activities contribute to your company’s operating expenses.

Being aware of that dichotomy will enable you to start thinking about it more strategically, to guarantee that your GTM activities positively impact your company’s finances.

4. Financial statements drive unit economics

The next thing RevOps leaders need to understand is that financial statements drive unit economics.

In other words, you can use that data to figure out the cost of obtaining and serving a new customer.

And from there, you can fine-tune your approach for financial efficiency.

Below are some of the most important unit economics metrics for RevOps leaders to keep on their radar.

Here’s what each of those metrics tells you:

• CAC: How much money are you spending on sales and marketing to acquire one new customer?
• Cost per lead: How much money do you need to spend to generate a new lead?
• NRR: If you never sell another customer, can you remain in business? If your NRR is greater than 1, the answer to that question is yes.
• Cost per opportunity: How much does each qualified opportunity cost?

Tracking these metrics and fine-tuning your approach over time can help you drive revenue more effectively.

5. Why do RevOps the hard way?

It’s important to realize that you don’t have to do RevOps the hard way, and to leverage the tools and communities around you.

RevOps Co-op is a forward-thinking community for RevOps leaders that serves its 15,000+ members through:

• On-demand RevOps expertise
• Best practice content
• Education opportunities
• Network events

RevOps Co-op can help RevOps pros take their strategic and financial performance to the next level.

Learn even more about corporate finance and RevOps

The interplay between finance and RevOps is absolutely crucial to success for SaaS and tech companies.

That’s why we discussed it in depth at this year’s Modern SaaS Finance Forum.

Hosted by Sage Intacct on June 5th, the full-day digital event was attended by 2,000+ SaaS industry experts, leaders, and investors eager to share best practices and learn the latest strategies.

After receiving excellent feedback, we decided to make the forum sessions available to anyone who’d like to listen and learn.

You can access them here.