Fueling SaaS finance success with GenAI

Succeeding in SaaS requires MUCH MORE than just offering a great product or fulfilling a genuine customer need. If you can’t back up those external factors with a well-oiled and optimized finance department, you’ll soon find your momentum flagging.

But here’s the thing. The members of your finance department will only be as effective as the tech stack you’ve supplied them with. That’s why it’s imperative for SaaS CFOs to consider the business benefits of generative AI (GenAI) accounting tools.

In this blog, we’ll 1) Offer valuable context on SaaS finance and the unique challenges it poses, 2) Explore how GenAI intersects with SaaS finance, 3) Look at the day-to-day benefits of GenAI for finance teams, 4) Discuss the unique benefits of GenAI accounting tools for companies with a subscription business model, and 5) Dive into valuable GenAI use cases for SaaS finance teams. 

Keep reading if you’re ready to learn how this innovative tech can fuel your organization’s success.

What makes SaaS finance unique?

SaaS companies deal with a number of financial realities that make them unique among corporate organizations. SaaS finance teams engage in reporting, forecasting, and financial planning and analysis (FP&A) just like any other accounting department. However, the strategic details that underlie those activities are unique to subscription companies.

SaaS finance teams need to worry about considerations such as:

• Managing subscription journeys and maximizing renewals
• Recognizing revenue in compliance with ASC 606
• Finding the best subscription billing method for your company
• Forecasting the impact of churn on future cash flow
• Optimizing investor relations and ensuring profitable capital raises

That’s a tall order, and it only scratches the surface. With so many complex accounting workflows swirling around, it’s no surprise that SaaS finance teams run into some recurring problems. 

Let’s take a look at some of the primary operational challenges SaaS finance teams face.

What makes SaaS finance uniquely difficult?

Maintaining operational efficiency and visibility are two major roadblocks SaaS accounting teams face. Those two foundational challenges manifest in all kinds of day-to-day problems and inconveniences for your finance team.

These include:

• Keeping up with your company’s SaaS metrics: Legacy accounting tools don’t offer SaaS metrics integration. This means your key performance indicators (KPIs) won’t be updated in real time. That’s a serious strategic disadvantage, both in terms of time wasted on manual labor and the inevitable inaccuracies that creep into your reporting.
• Maintaining ASC 606 and IFRS 15 compliance: SaaS revenue recognition is strictly regulated. Any deviation from accepted practices will result in stiff non-compliance fines and revenue leakage–unreportable revenue, in other words.
• Forecasting an evolving landscape: The unique complexities of SaaS finance make forecasting especially crucial but also especially difficult. Manual forecasting takes huge amounts of time and is prone to formula errors, data entry mistakes, and high variance rates.

• Navigating an abundance of pricing options: The SaaS industry is known for its flexibility and creativity around pricing methods. However, this freedom of choice can very quickly grow overwhelming. Without automation, it’s extremely difficult to be certain you’ve made the best selection.

Now that you’ve had a refresher on the intricacies of SaaS finance, let’s see how accounting software equipped with GenAI can optimize these processes.

How does GenAI benefit SaaS finance teams?

Traditionally, AI has been rather narrow in its business applicability, in the sense that AI models would typically be used to accomplish a repetitive task based on predefined rules. This is extremely useful, but its flexibility is limited.

Generative AI (GenAI) represents the next generation of enterprise automation. GenAI models are trained on massive amounts of online data, allowing them to rapidly produce humanlike content.

As you can imagine, this significantly impacts SaaS finance efficiency. Below are some of the primary ways SaaS finance teams benefit from accounting software equipped with GenAI. 

Streamlining financial operations

In a legacy SaaS finance department, tremendous amounts of time and money are devoted to manual accounting workflows. GenAI saves time and cash while eliminating costly manual errors.

How can this innovative technology improve your department’s effectiveness and efficiency?

Accounting software with GenAI integrates with your SaaS metrics.

Your SaaS metrics are crucial to your long-term profitability. They allow you to keep track of pivotally important KPIs–your annual and monthly recurring revenue, churn rate, customer lifetime value, customer acquisition costs, and many others.

Manually tracking your SaaS metrics is impractical at best and impossible at worst, depending on your company’s size and transactional velocity. Cloud accounting software with GenAI features full SaaS metrics integration and role-based dashboards for real-time reporting.

Automating your reporting and SaaS metrics tracking frees up large amounts of time for more proactive and profitable activities.

GenAI optimizes SaaS forecasting for finance teams.

Legacy SaaS forecasting is a tedious and error-prone process that involves assembling data with email chains and piecing forecasts together in spreadsheets.

The liabilities here are numerous, including:

• Compromised business data from email hacking.
• Manual forecast errors–formula errors, data entry mistakes, and more.
• Intolerably high rates of forecast variance.

GenAI makes SaaS forecasting as simple as entering your starting data and clicking a button. No more hassle and no more second-guessing your results.

GenAI can create high-quality board packs and capitalization tables.

For SaaS CFOs and accounting teams, optimizing financial clarity for board members and investors is paramount. Board members and investors demand high levels of transparency into a company’s cash flow, operational performance, and overall effectiveness in the marketplace.

Cloud accounting tools with GenAI can generate board packs complete with the latest financial storytelling techniques for SaaS companies.

GenAI accounting tools are particularly well-suited to subscription organizations. Let’s explore why that is.

GenAI can cure SaaS growing pains

As we touched on earlier, a variety of factors can make it particularly difficult for SaaS finance teams to:

• Handle the intense industry reporting requirements in a timely and accurate manner.
• Maintain visibility into cash inflows and outflows, especially at scale.
• Engage in effective FP&A to keep renewals high and churn low.

And it’s especially difficult to handle all of that at scale. GenAI accounting tools can help your subscription organization overcome these challenges and win your market.

Facilitating scalability in SaaS finance

When you rely on legacy accounting workflows, it’s tremendously difficult to maintain efficiency as you scale. From accounts payable and receivable to revenue recognition, manual errors are almost guaranteed to become more frequent as your transactional volume increases.

Accounting software with GenAI can keep that from occurring. With cloud tools in your department, you can handle 15,000 users as easily as 1,500 or 150. 

Forecasting can be another problem for growing SaaS companies. Forecast assembly and calculations become more complicated as your underlying data pool deepens. GenAI tools can quickly assemble a low-variance forecast no matter how complex your needs are.

GenAI’s Role in SaaS revenue recognition

Ensuring accurate revenue recognition and compliance with United States accounting standards like ASC 606 can be a struggle for SaaS companies. By consolidating revenue data from multiple sources with a single source of truth, accounting software with GenAI sets companies up for accurate and efficient revenue recognition.

Revenue leakage and non-compliance fines can add up quickly, limiting your operational resources. An ounce of AI-fueled prevention is worth a pound of cure. Let’s peel back a few more layers.

Ensuring ASC 606 compliance

Automated cloud software uses machine learning technology for ASC 606 monitoring and reporting. GenAI guarantees regulatory conformity through automated workflows, providing a seamless–and inexpensive–alternative to manual compliance.

By combining revenue recognition best practices with GenAI, SaaS CFOs can:

• Receive automatic alerts about regulatory updates.
• Streamline the compliance auditing process.
• Have peace of mind that standardized protocols are being followed.

How else can GenAI help your SaaS business maximize revenue recognition efficiency?

Process automation and centralization

GenAI automates and centralizes ASC 606 management, ensuring that your revenue sticks around to fuel future growth–instead of leaking away. Since revenue recognition occurs continuously for each contract, having a centralized automated system dramatically simplifies the process as you scale.

From a young SaaS startup to the largest software organization in America, any company stands to benefit from centralized ASC 606 management. 

Are you ready to fuel your SaaS finance success with GenAI?

A quick Google search is all it takes to see what a huge topic artificial intelligence has become and how much promise it holds. But for SaaS CFOs, GenAI is uniquely well-suited to optimizing operational effectiveness. It can help you onboard new users more efficiently, maximize your annual recurring revenue, easily handle complex hybrid billing models, and much more.

It’s the equivalent of having a full team of employees to handle tedious and repetitive but vital tasks–freeing up you and your team to knock out the high-level strategizing.

To learn how a robust tech stack with GenAI can help you win your market, check out our Sage Intacct demo for software and SaaS companies.