Cash runway is more than ever a focus for finance teams and business owners alike. It indicates how long you have before running out of cash - and running into serious trouble. The good news is that strategies do exist to extend your cash runway and they don’t always mean laying off team members. Read on to find out more!
Everything about SaaS Finance
Welcome to our guide about SaaS Finance! Here you’ll find many resources to help you get started with the finance of your SaaS company.
How is SaaS finance different from other businesses?
SaaS finance is different from more traditional B2B businesses as this business model can have more specificities.
For starters, SaaS businesses typically handle higher sales volumes, resulting in increased transaction processing. Secondly, B2B SaaS companies can offer a range of products or services. This can include a simple plan to fully customizable offers for certain clients.
SaaS finance also includes processing training fees, and accounting management fees, and deals with discounts, coupons, and various add-ons. On top of that, most of the time SaaS company relies on a subscription model, the businesses also have to deal with deferred revenues. All these specificities result in more complex accounting processes and could benefit from automation.
4 ways to make your revenue grow with SaaS accounting
SaaS Finance is a crucial part of any SaaS business. It involves managing the financial aspects of your SaaS business, including revenue growth, expenses, and profitability. To make your revenue grow with SaaS accounting, there are several strategies you can implement:
Firstly, focus on customer retention and upselling to existing customers and avoid churn. This will help you increase revenue without having to acquire new customers.
Secondly, invest in marketing and sales efforts to acquire new customers and increase brand awareness. This will help you bring in new revenue streams and expand your customer base. Additionally, consider implementing a pricing strategy that is based on usage, rather than a flat fee. This will allow you to increase revenue as your customers use more of your services.
Finally, monitor and analyze your financial data dashboards regularly to identify areas of improvement for data decision-making. By implementing these strategies for better financial planning, you can effectively manage your SaaS finance and increase revenue growth.
Use dedicated Accounts Receivable management software to streamline your cash collection efforts. Closing deals is good but if the cash never ends up in your business’s bank account it won’t do you much good. An AR solution will replace your pesky excel spreadsheet and help your finance team be more efficient. Thanks to revenue recognition automated invoicing you can save tones of time.
The right SaaS Finance Tech Stack for your Business?
Building your SaaS finance tech stack can save you time on repetitive tasks such as billing, collecting and recognizing revenue, and reducing overdue payments. When choosing accounting software for your SaaS business, it is essential to consider scalability, automation, and reporting. QuickBooks and NetSuite are both leaders in the industry but have some crucial differences Choosing the right software is a business decision that should be made in conjunction with your business team.
In addition to accounting software, other elements of a finance tech stack include a billing and a payment processor. An open and integrated tech system can improve accounts receivable management, automate repetitive tasks, and provide real-time financial reporting. Automation can also enhance productivity, reduce human error, and promote collaboration within the company.
A robust finance tech stack can support revenue expansion and growth by connecting your CRM, accounting, and billing tools together. A CRM like Salesforce can track marketing and sales activities, while a subscription management software like Chargebee can manage the subscription lifecycle and act as a billing tool. The size of your business will determine which accounting SaaS software is best for you.
What are the key SaaS financial metrics you should be tracking?
MRR, ARR and DSO are key metrics your SaaS finance team should be tracking.
MRR (Monthly Recurring Revenue) represents the recurring revenue coming in every month, including subscription fees, add-ons, and special features. It's a good indicator of business health for fast-growing companies. To grow MRR, you can either increase your average subscription fee or the number of clients you have.
ARR (Annual Recurring Revenue) is the yearly amount of recurring revenue from clients. It helps you compare growth year after year and make long-term decisions. To calculate ARR, simply multiply MRR by 12.
CAC (Customer Acquisition Cost) is the cost incurred to acquire new customers over a given period. It's essential for tracking which marketing actions were effective and keeping an eye on the cost of acquiring new customers. If CAC is higher than CLV (Customer Lifetime Value), it means you're losing money. CAC can be calculated by taking marketing and sales expenses incurred over the number of new clients gained during a given period.
All our articles on SaaS Finance
Dec 16, 2022
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Your payment methods will impact your business’s long-term growth and scalability. So, what B2B payment methods exist, and which one should you choose for your business?
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Your payment choices will impact your organization, recruitment, and processes. Complexity reaches another level when you’re a B2B SaaS. Choosing the right payment stack is paramount: if you’re not careful, you might lose clients without even noticing it. So, what software do you actually need? How should you choose the right solutions?
Sep 14, 2022
A subscription model for SaaS is a great avenue to bring in more cash, on a consistent basis.
Jul 20, 2022
While it is tempting to glance at your accounts receivable total and call it a day, there is so much more to your A/R! To make the best analysis, you need to make sure that the data you use is accurate. With proper tools, you can get more in-depth analysis to foster your long-term growth.
Jun 21, 2022
Having the right billing software is critical for your SaaS. But with so many existing solutions it can get overwhelming to choose the right one.
Mar 23, 2022
By seeing what works and what doesn’t in your B2B SaaS business, financial metrics improve your decision-making for the future - and your cash management too.
Mar 16, 2022
Deferred revenue is a vital financial topic for most SaaS - even if it might not be the most exciting one. How can it contribute to your growth?
Mar 10, 2022
Each subscription solution offers a unique set of features, the question is: which one is the right one for your business?
Feb 24, 2022
Which SaaS accounting software is the right one for us? That’s a question every CFO/CEO of a B2B SaaS company has been faced with.
Feb 16, 2022
For a B2B SaaS, having access to relevant financial insights can often make or break the business.
Feb 10, 2022
Need a new payment processing software for your B2B SaaS? There are various criteria to keep in mind:
Feb 1, 2022
A comprehensive guide to implementing a subscription revenue model in your B2B SaaS business.
Jan 20, 2022
Revenue recognition can be challenging, especially for SaaS and subscription based models
Jan 13, 2022
A guide to help you learn about the different pricing models for B2B SaaS companies.
Dec 16, 2021
Discover the ideal finance stack for your B2B SaaS Scale-Up.
Dec 2, 2021
Don’t overlook your finance stack — the right tools are paramount to support your growth.
Jun 21, 2021
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