In a world where data leads the way and a company is only as effective as it is agile, the importance of staying technologically mature is paramount.
There’s a large cost associated with prolonging legacy processes and systems—both monetarily and in terms of agility and competitive advantage. And with each day a SaaS business fails to advance its tech stack, that bill comes due.
Amazon’s Jeff Bezos frames the situation well.
“In today’s era of volatility, there is no other way but to reinvent. The only sustainable advantage you can have over others is agility. That’s it. Because nothing else is sustainable. Everything else you create, somebody else will replicate.”
Not only has this digital transformation imperative affected the basic requirements for competing in the world of SaaS, but it has also reshaped one business role in particular—the CFO.
Technological maturation is a company-wide concern that can only happen with cohesive support and enthusiasm from the top down. And at SaaS businesses everywhere, the CFO is part of the crew leading the charge toward this transformation.
With the right tools and integrations in place, CFOs and their teams of finance professionals have unique access to a wealth of data that can positively impact the entire SaaS ecosystem, from marketing and sales to billing, customer success, and beyond.
And with increased automation and enhanced efficiency, there’s more opportunity for digging into the data and offering all new levels of intelligence-based strategy and direction.
4 Key roles of the modern SaaS CFO
Let’s first get a little deeper into the responsibilities of the modern SaaS CFO. Then we’ll dig into the methodologies and solutions these leaders are using to mature and transform SaaS businesses.
1. The gatekeeper:
The modern SaaS CFO serves as a financial gatekeeper:
- protecting the business from risk and communicating these risks and financial merits to investors and boards
- guaranteeing compliance with financial regulations, and
- balancing the books to ensure a fiscally sound future.
It’s through the modern SaaS CFOs that all important finance-related decisions pass.
2. The strategist:
SaaS CFOs now also play a big part in influencing important strategic decisions that impact the future of the business. They:
- work to align business and finance strategies in a direction conducive to high-performance growth
- strategize on funding, as well as mergers and acquisitions, and
- play a key role in supporting long-term business investments.
CFOs are the primary source of financial direction for their SaaS businesses.
3. The optimizer:
Naturally, the SaaS CFO also takes a leadership role in all aspects of a business’s financial wellness. This includes:
- providing services such as financial planning and analysis
- serving as a fiduciary guide on optimal resource allocations and re-allocations, especially during times of crises
- managing cash flow and related risks, and
- guaranteeing smooth tax operations.
To ensure an efficient and effective finance organization, the CFO must ensure the business has what it needs to run its day-to-day operations.
4. The change agent:
CFOs are also able to serve as an impetus to action and improvement within their organizations, especially when it comes to changes integral to the function of the financial enterprise. These selective maneuvers may include:
- procurement of tools (software and hardware), services, and assets
- reduction of costs, and
- adjustments to pricing strategy.
The modern SaaS CFO may also suggest process enhancements or new innovations to bring added value to the business.
FinOps to lead digital transformation
The various roles of the modern SaaS CFO depend on highly specialized FinOps tools to manage data and create a process the CFO can derive their insights from.
Apart from managing the finance function, there are specific SaaS metrics that need to be monitored and optimized. And to serve all these needs under the CFO umbrella, it’s necessary to operate a fintech stack that accommodates business and operational inputs to deliver actionable data insights.
The modern SaaS CFO needs to use the right technology to gather all the data points so they can drive business efficiency, decision making, and ultimately, success for their business.
The following are examples of high-level tools the modern SaaS CFO uses to build their comprehensive financial technology stack.
Accounting: Accounting platforms like QuickBooks and FreshBooks enable businesses to track income and expenses, rapidly generate reports, summon account data, document sales, and more.
Some accounting platforms can also generate documents necessary for the procurement of loans and investments.
ERP: An enterprise resource planning system or ERP acts as an integrated hub of business operational data that can be accessed and updated in real-time.
ERP systems like NetSuite and Wrike allow SaaS-enabled CFOs to get almost up-to-the-minute data on many key operational points so that they can turn on a dime when necessary. For this reason, they’re often seen as one of the most valuable assets in the CFO’s tool bag.
Recurring Billing: Automated recurring billing systems serve to streamline billing for SaaS, payments, compliance and similar finance processes that might otherwise have taken days or weeks.
Platforms like Stax Bill automate invoicing and collections, simplify catalog and subscription management, and expedite revenue recognition and reconciliation.
They also provide CFOs and other leaders in the business the granular data needed to monitor and analyze important SaaS metrics attached to the revenue engine in real time.
Tax compliance: Ensuring accurate taxation begins to get very complicated for SaaS businesses scaling across regions, states, and countries.
Automated tax software like Avalara and TaxJar help finance teams accurately apply and manage tax types regardless of where their customers reside.
Payment management: The online world has made payment processing a little more complicated than it used to be. But having the ability to provide customers with multiple reliable options can help a SaaS business get paid faster.
Payment systems like Stripe, Braintree, and Authorize.net make it easy to accept many payment methods and currencies from customers around the world.
Cash flow forecasting: Financial forecasting tools like Float, HighRadius, and Tesorio allow for integrated, scenario-based analysis. They help CFOs and their finance teams make cash flow projections and derive actionable insights from trends over various time periods.
Many forecasting programs can even make real-time emergency notifications to alert businesses when forecasts have not aligned with reality so that necessary adjustments can be made.
Payroll/HR: Solutions like Workday, Paylocity, and Rippling automate attendance records, benefits, tax deductions, and other wage-related calculations that previously occupied a significant portion of time.
Robust HR programs also help with recruitment, workforce management, and company-wide communications.
Accounts Payable: AP programs like Nvoicepay, Stampli, and AvidXchange eliminate the need for mail-based payments, allowing bills to be approved and reconciled with a few clicks.
AP programs also have the added benefit of reducing the possibility of error and even fraud.
Tearing down data siloes for better SaaS integration and intelligence
Almost 70% of CFOs agree keeping data siloed in departments is one of the biggest financial mistakes a company can make. Unfortunately, outdated technology solutions make this problem very common.
By advocating for systems and solutions that integrate, thus allowing data to synch seamlessly across departments, CFOs can solve these issues while also creating scalability and more comprehensive business intelligence.
For example, when customer and quote data can flow directly from the sales process into a business’s billing engine, vital customer information and financial details remain accurate and accessible to everyone who needs them.
An estimated 87% of businesses lack maturity in the way they share and analyze customer and financial data across departments. Consequently, communication lags, duplicate records, and human errors complicate the business database and negatively impact data accuracy and customer experience.
CFOs can also use technology to eliminate these issues associated with a disconnected ecosystem by establishing a single source of truth (SSOT) for their accounts receivables.
An SSOT works by keeping important information accessible to—but not alterable by—all relevant departments.
The true sign of a modern SaaS CFO
The value of a finance leader has never solely been their skills with calculation and data entry. Their true value has always been realized in their ability to analyze what business results really mean.
And now, this evolution from reporting on what has already happened to informing and impacting what can and should happen in a SaaS business’s future is the sign of a true modern CFO.
The pandemic conditions of 2020 have served to put the exclamation mark on a point that has been in development for years: the role of the modern CFO has changed, permanently. And that change is also pushing SaaS companies toward greater technology transformation and maturation.
A recent study showed that only 13% of CFOs feel their finance departments are using technology to its fullest. So clearly there’s still a way to go.
But CFOs that are in fact leading the way when it comes to the maturation and transformation are bringing whole new levels of flexibility, agility, and efficiency, not just to their FinOps, but to their entire businesses. And SaaS businesses with these tools in their belt bring a strong competitive advantage to the new world of SaaS.
