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Software as a Service (SaaS) companies provide valuable insights in many ways that can be applied to organizations in other industries, such as manufacturing, healthcare, energy, transportation, financial services, and even the nonprofit sector. SaaS is asking us to rethink how we view and account for everything from quote-to-cash, procure-to-pay, business forecasting, revenue recognition, cash channels, and more.
SaaS companies are pioneers in financial innovation because of their roots in cutting-edge technology, adoption of advanced metrics, and data-rich business models. From initial startup funding to scaling up for an IPO, SaaS companies have mastered the art of simplicity and used frictionless financial automation to achieve rapid growth.
SaaS is also seeing the rise of new and enhanced financial techniques and metrics, such as customer acquisition cost (CAC), net revenue retention rate (NRR), customer lifetime value (CLTV), and churn rate. They provide a comprehensive view of an organization’s financial health and growth potential, making it essential for strategic planning and decision-making.
But what is the right strategy for applying these advantageous technologies and metrics outside the walls of the SaaS business model? To get started, consider four key strategic imperatives that apply across the sector: Sho.
Expanding the role of the CFO – As the role continues to evolve, CFOs must embrace solutions that move them beyond financial reporting and into the higher-value world of strategic business advisory capabilities. This expansion requires an increased focus on data management, business intelligence, and cross-functional collaboration. Leverage AI effectively – There is no denying that AI is essential to advanced financial strategies. The key in the short term is to deploy it in areas with immediate benefits (data entry, anomaly detection, report generation, etc.). This approach lays the foundation for AI to play a more strategic role, allowing financial institutions to focus on higher-value activities. Addressing workforce shortages with automation – With a shortage of qualified finance talent, CFOs are looking to apply automation to AP/AR processes, cash management, and reconciliation. This not only increases efficiency, but also increases employee satisfaction across your team. Tackle data quality challenges – As companies grow, it becomes increasingly difficult to maintain clean and consistent data across multiple systems and entities. Ensuring accurate, auditable, and secure data is critical to scaling effectively.
A new technology stack – enabling both automation and insight
To meet these new demands, companies must rethink their reliance on traditional ERP systems. SaaS companies have revolutionized the way companies think about technology infrastructure, especially in the financial sector. The ability to scale quickly while maintaining operational efficiency provides valuable lessons for building technology stacks that drive both automation and strategic insight. Traditional ERP systems have long implementation cycles, low flexibility, high costs, and highly complex processes that make them unsuitable for agile, fast-growing organizations. They struggle to keep up with the changing financial and technological needs of small businesses.
By leveraging a SaaS-inspired approach, companies across industries can modernize their financial operations and achieve similar success. Let’s take a quick look at the next generation technology stack for finance.
Robust General Ledger – It’s essential to build a GL that streamlines financial management and enhances decision-making and compliance by providing accurate real-time tracking of accounting, budgeting, and reporting. Flexible billing processes – One of the hallmarks of the SaaS industry is its ability to support flexible billing models, such as subscriptions, tiered services, flat fees, minimum fees, overage fees, discounts, rollovers, or a combination of these options. . The technology stack needs to keep pace with the business. Sophisticated Revenue Recognition Models – Even in 2024, finance departments still rely on spreadsheets for complex tasks like revenue recognition. SaaS companies pioneered revenue recognition software, and their capabilities are now mandatory in nearly every industry. Comprehensive reporting – Today’s CFOs are expected to provide board-level overviews and accurate details on the entire business, from finances, product investments, hiring, acquisitions, churn strategies, and more. Multi-factor forecasting – Finance teams need to provide more than retrospectives. If the situation changes, the team is expected to create accurate automatic predictions. The technology stack must support robust “if-then” predictions for any scenario, creating contingency plans and course corrections that maintain optimal conditions.
Shipium, a SaaS-based enterprise delivery platform provider, serves as an example of how implementing modern financial systems can transform operations. By implementing Sage Intacct, Shipium reduced monthly close time from weeks to just hours and achieved more accurate cash forecasting with only a 1.2% deviation from full-year operating plans. This transition will enable Shipium to automate invoicing and gain greater visibility into key metrics, enabling management to make more informed data-driven decisions and focus on strategic growth. Now you can.
Scale up – financial maturity model
Now let’s take a quick look at what a SaaS financial strategy looks like for almost every small, high-growth business. The SaaS business model provides a great template for a “financial maturity model” for these companies. Depending on where you are on the growth continuum, here are the milestones you should plan for.
Seed Capital – Startups use capital to determine product/market fit and find early (and loyal) customers. Financial goals are fundamental: managing cash and payroll and ensuring burn rates advance the company to the next round. Series A – At this stage, the company aims to prove its revenue model and double its size within 12 months. The finance team focuses on cash flow and billing automation as the company discovers and develops a profitability model. Series B – Here, organizations work with repeat customers to prove the scalability of their revenue model. The finance department has no trouble handling contract amendments, advanced revenue recognition, and period-end closing. Forecasts from Series C to F are more detailed and accurate – in these phases, the company expects to achieve ~$100 million in gross profit (a key metric) through a predictable, profitable, and repeatable business model. Grow. Finance has evolved into an IPO or sale with a full FP&A team. Proceeds from this round will help expand the product line and raise capital. The company enters adjacent product markets and regions. Of course, at this stage, net profit is the ultimate criterion.
SaaS companies are redefining the way we think about finance, and there’s much to learn from their many success stories. By adopting the latest technology stack and applying leading metrics, CFOs and managers across the industry can move from tactical operations to strategic leadership and scale their businesses from seed financing to IPO. You can “keep your eyes on the prize.”
