Priorities for SaaS finance leaders are often difficult to establish because the software industry moves so rapidly. In a market downturn like we’ve seen lately, knowing your core priorities can keep you grounded on what to do and when.
In this article, we’ll outline what your top 6 priorities should be–and give you with actionable ideas for how to move on them now.
We’ll also address a few of the most common financial management challenges for SaaS firms, as the foundation is key for scale. The priorities discussed in this post are meant to be evergreen, so their relevance and applicability should hold for years to come.
Priority 1: Data Quality and Integrity
As the CFO of a SaaS organization, the quality and integrity of your data should top your list of priorities. You might think, “With all the financial management challenges confronting my team, how can you single this issue out so confidently?”
It’s simple. From revenue recognition to churn tracking, pricing rollouts, and everything else, every financial operation relies on data.
So if the quality of your data starts to slip, the integrity of every data-dependent process declines with it, and soon you’ll be swimming in financial management challenges.
Why CFOs are Moving to the Cloud
In terms of priorities for SaaS finance leaders, data leads the pack. But cloud-based accounting is second on our list, and has quickly become a mainstay at many firms.
You should select a financial management system rooted in the cloud because cloud accounting:
- Eliminates manual processes, erasing many financial management challenges along the way.
- Facilitates nuanced billing structures and automatic invoicing.
- Enables clear data visualization and financial storytelling, allowing teams to better spot usage trends.
How else does the cloud help CFOs tackle their financial management challenges?
Ensure Data Quality With Continuous Processes
Cloud-based financial management systems use automation to update and sync your data continuously. From continuously closing your books to providing constant real-time updates whenever you need them, AI operates faster and more accurately than humans at these repetitive, data-heavy tasks.
And with a single source of truth (SSOT), any department or team member who needs it can access key financial data. CFOs can also put customized control architecture in place to set access parameters.
Priority 2: Keeping Up With New Tech
Next on our list of priorities for SaaS finance leaders is the necessity of staying current with your tech.
Like your data, your SaaS finance tech stack is foundational to all your other processes and workflows.
Opt for Built-In, Long-Term Scalability
Rather than thinking of scaling your company as a vague future event, try seeing it as a process already underway–one that you can influence and accelerate.
SaaS CFOs can help their companies scale more seamlessly by following some scalability best practices:
- Leverage AI and machine learning to seamlessly interact with large datasets.
- Support third-party functionality to build a cohesive financial ecosystem.
- Automate billing in multiple currencies and set your department up for multi-entity accounting and consolidations.
Remember, even if you’re a smaller-stage company and haven’t run into some of these financial management challenges yet–billing in multiple currencies, for instance–part of your job is thinking ahead for tomorrow.
Priority 3: Staying Compliant and Secure
Compliance and security are among the top priorities for SaaS finance leaders, and with good reason.
Data leaks or compliance slips can cause severe reputational damage to your firm and also carry hefty fines.
A cloud-based financial management system provides multiple layers of compliance and security safeguards.
Automated Regulatory Updates
As the CFO of a recurring revenue company, you’re accountable to stringent regulations like ASC 606, IFRS-15, SOX, and others. Not only that, but SaaS companies need to be able to adjust to regulatory changes as they occur.
Real-time regulatory updates help SaaS finance leaders stay current on the latest updates that might impact their organization.
Paperless Audit Trails
No one enjoys compliance and security audits, but they’re a necessity. Paperless audit trails give you detailed data about every transaction with every customer.
You’ll even be able to answer the detailed questions many auditors ask, including why a certain billing relationship changed at a given date and many others.
Robust Approvals Architecture
An inadequate approvals architecture can create a substantial mess for SaaS accounting teams. Not only can it lead to the mismanaging of funds and transactions, but it can also result in an auditing nightmare.
A cloud-based financial management system allows you to seamlessly create a robust approvals system–and once you create it, you can edit and alter it with a single click.
Priority 4: Moving Away from Manual Processes
Manual processes should be minimized wherever possible in your department.
The idea isn’t necessarily to replace employees, but to allow employees to focus on activities that humans are uniquely suited to–working in tandem with automated reports to identify financial narratives, for instance.
What are some critical accounting workflows that manual processes have become impractical for?
Preventing revenue leakage is one of the major priorities for SaaS finance leaders. For revenue to be recognized successfully, your data must be continuously updated in sync.
With manual processes and data scattered across departments, this ranges from difficult to impossible. The inevitable result is revenue leakage, but you can overcome that challenge with automation.
When you automate the revenue recognition process with an SSOT, all your financial data is continuously updated in a centralized location. This unifies your data and eliminates the risk of revenue leakage from manual errors.
Cloud-based reporting allows SaaS finance teams to overcome many legacy financial management challenges.
The cloud enables SaaS finance teams to do away with:
- Manual data gathering and email chains
- Errors from manual processes that nobody noticed until it’s too late, and you’re already presenting to your board
- Hunting around for a specific SaaS metric or dataset only to find that your manual reporting tool doesn’t support it
The cloud is also very useful for SaaS billing.
Flexible Automated Billing
Flexible automated billing is a critical component of modern SaaS accounting.
Manual billing can slow down growth and profitability in multiple ways. Internally, it results in more errors that need to be corrected, and slower work. Externally, your customers will be more likely to churn out of annoyance with billing errors or similar issues.
Or they might prefer a hybrid billing approach that isn’t supported by your accounting tech stack.
Automated billing can enhance profits by providing a smoother customer experience, and helping your team operate more effectively.
Priority 5: Forecasting Accurately
Our list of top priorities for SaaS finance leaders wouldn’t be complete without forecasting.
Your forecasts help you maximize the impact of your FP&A, craft profitable pricing strategies, spot usage trends, and much more. And a cloud-based financial management system helps SaaS CFOs do all of that even more effectively.
Actionable Forecasts for Your Stakeholders
Forecasts from an AI-based financial management system carry several advantages:
- Forecasts become a “plug and play” process: to initiate a new forecast or edit an existing one, just enter your data and click a button.
- Automated forecasting offers insights across a much broader time horizon. If you can make detailed financial plans far into the future, your ability to bring those plans to fruition will increase.
- Increased accuracy from eliminating manual processes means your stakeholders can trust your data and act on it confidently.
What’s our sixth and final entry on our list of top priorities for SaaS finance leaders? Glad you asked.
Priority 6: Aggregating Data and Establishing an SSOT
Why does data aggregation appear on a list of top priorities for SaaS finance leaders?
When different departments individually manage and update their data–a practice called data siloing–errors or inconsistencies invariably slip in.
How are SaaS CFOs moving past data silos, and what risks are associated with this outdated approach?
Role-based dashboards are customizable screen views built with specific individuals in mind. CFOs commonly opt for a financial management system with role-based dashboard functionality because:
- It saves considerable time and mental bandwidth for decision-makers on your finance team.
- Having all their relevant data in one spot allows your team to pick up on usage trends and strategic insights more effectively.
Combining role-based dashboards with an SSOT eliminates many financial management challenges and will help your department unlock its full potential.
But why is siloed data risky in general?
Risks of Siloed Data
When you silo your organization’s data across different teams, you restrict your firm’s ability to scale.
This is because data silos often establish a “downward spiral” for companies.
In this downward spiral, manual processes and unsynced data updates make reporting and forecasting inefficient. In turn, this makes profitable FP&A very tricky. Beyond that, you’ll continuously suffer from revenue leakage because your datasets aren’t in sync.
And when the time comes to explain that revenue leakage and poor profitability in a board meeting, you’re back to square one–trying to do so with manual reports cobbled together from siloed data.
Achieve Your Organization’s Top Priorities
As we said at the beginning of this article, the top priorities for SaaS finance leaders are determined by the unique financial management challenges they face.
Legacy tactics won’t cut if you want to thrive in the modern SaaS industry. To learn about what SaaS finance leaders just like you had to say about their top priorities and challenges, check out our recent ebook.
Managing modern finance in a time of unprecedented change
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