Swim or Sink: 4 Survival Tips for the SaaS Finance Team

When times are lean, strategic financial leadership is more valuable than ever. By taking a few simple steps, you can greatly increase your chances of being one of the SaaS companies that swim rather than sink during a recession.

A few significant themes of this post will include:  

• Doing more with less 

• Eliminating human error

• Saving money and preventing revenue loss

Let’s get started. 

Survival Tip 1: Implement AI in your finance department

Automated accounting software allows finance teams to offload many repetitive-but-vital manual tasks. 

Everything from report and forecast assembly to data gathering for key executives is taken care of automatically. 

Rather than replacing human employees, this frees up your team members for more valuable and profitable contributions. 

Competitive advantages of finance automation 

During a recession, finance automation offers organizations several lifelines that aren’t available with legacy systems: 

• The ability to plan more effectively by running more robust and reliable forecasts. Automated forecasts are multi-factor, easily alterable, and just a matter of entering your data and clicking a button. 

• Far greater reporting granularity than is attainable with manual accounting methods. 

• Mutli-currency, multi-entity compatibility so that if conditions become less attractive here, you can easily pivot and prioritize international markets.

What else can SaaS CFOs and finance leaders do to ensure profitability in troubled times? 

Survival Tip 2: Plug up your revenue leaks 

One of the cornerstones of recession management–and sound financial management in general–is not to lose revenue. 

Recurring revenue companies recognize revenue differently than other types of corporations (under ASC 606 and similar laws). You might sell a 12-month subscription on January 1st, but you can’t immediately enter that as a lump sum of earned revenue. 

Those 12 months of revenue get broken up into service periods, with revenue gradually recognized across the year as you provide services to that user. 

This greatly complicates the revenue recognition process, making lost and unaccounted revenue much more likely. 

Still handling revenue recognition manually? 

Cloud-based financial management software automates the revenue recognition process, removing the risk of human oversight. 

Teams that handle revenue recognition in the cloud enjoy several benefits: 

• Revenue data is centralized and automatically updated.

• Automatic, real-time regulatory updates alert teams to any changes in revenue recognition laws. 

• Revenue recognition is seamless across currencies. 

Revenue leakage can add up quickly unless proactive steps are taken to find and address weak points in your financial workflows. 

Make the most of your metrics 

Successful financial management for SaaS companies requires a firm grasp of the objective realities around you. The best way to obtain that is by prioritizing metric-based leadership. 

Departments that base their financial decisions on metrics–and carefully track their metrics over time–can expect superior performance results.

Selecting your SaaS metrics 

When selecting your SaaS metrics, keep the acronym MUD in mind. It stands for Meaningful Underlying Business Dynamics, and serves as a valuable tool for finance teams. 

When looking at their companies through this acronym, CFOs ask questions such as: 

• What growth stage are we in? 

• What are our main profit drivers? 

• How established is the market we’re operating in? 

These questions will help you find the most appropriate SaaS metrics to watch for your unique situation. 

Metrics and automation 

Teams that incorporate financial process automation enjoy a much more efficient relationship with their metrics and KPIs. 

When you introduce automation, your metrics are updated in real time as changes occur. In rough markets, this makes financial planning easier and more efficient. 

When teams rely on spreadsheets to track and update their metrics, mistakes can creep in that will complicate or skew their downstream financial results. 

Cloud-based financial management software comes equipped with a brimming library of SaaS metrics and KPIs for all corporate growth stages. 

Make sure you have billing flexibility 

Adaptability is one of the hallmarks of SaaS companies that not only survive but thrive long-term. And one of the most essential aspects of corporate flexibility is billing and pricing. 

Automation makes it much simpler for finance leaders to forecast the results of different pricing structures, including: 

• Hybrid billing

• Usage billing 

• Feature tiers

• Freemium billing 

Automation gives finance teams the flexibility to create pricing models that appeal to customers while maximizing profits. 

Do more than survive: thrive through modern leadership  

Even if you make it successfully through the present recession, there will be others. That’s a practical certainty. And they could very well be worse. That’s why it’s not enough to focus on quick fixes. Finance pros need to develop the mindsets and skills that will enable their teams to thrive across time in any financial environment. 

Get hands-on, practical tips from industry leaders and subject matter experts on ways to survive and scale your business as a finance or accounting leader at the Modern SaaS Finance Academy. 

To join the academy today, click here.