Knowing your cash and metrics can be the difference between winning your market versus having to do layoffs. CFOs who build the most flexible and robust SaaS tech stacks and adopt new tech sooner are more likely to thrive, even in a market downturn.
The perfect SaaS technology stack
The importance of building the best SaaS technology stack for growth cannot be stressed enough. Modern FinOps teams are using their SaaS tech stack to gain visibility and access to data across the business. As a result, they can:
- Centralize their data for reporting: The right SaaS technology stack will help you eliminate the endless, tedious back-and-forth that characterizes many accounting teams. When you switch to cloud-based accounting, all your team members will have access to all their data from a single source of truth (SSOT).
- Better forecast: The data centralization we mentioned above extends beyond the finance department. It also helps your finance team stay connected to your sales team and your sales team stay connected to your marketing department. Your entire company thrives when all your teams operate as a single, agile revenue operations business unit.
- Turn RevOps into a profit driver: When you leverage the right SaaS technology stack, your finance team will forever break past the old stereotype of accounting just being about reporting and compliance. With automation of the tech stack, your team can focus on more strategic and profit-generating activities.
Let’s check out a few specific ways SaaS finance leaders are updating and upgrading their SaaS technology stack for 2023.
The best tech stack for SaaS is easy to use, dynamic, and configurable
As a CFO, it’s your job to constantly scan the horizon for ways to optimize your department and your SaaS tech stack. How can we build the best technology stack for growth in 2023? Strategically-minded SaaS leaders are incorporating cloud-based automated accounting software to streamline financial management processes and gain enhanced visibility into business performance.
How to choose the best SaaS tech stack for your company
Your FinOps team needs visibility and access to all sorts of business process data. Accessing this data should not create new workflows or hinder current workflows. Additionally, the perfect tech stack for SaaS must cover both operational finance and strategic finance needs. When choosing a SaaS tech stack, look for solutions that can:
- Integrate across functions to increase automation and centralize data
- Enable teams across the business to collaborate in the same system
- Be your framework of financial controls to meet ASC 606, GAAP, and IFRS 15 compliance requirements
- Allow you to take advantage of new technologies like artificial intelligence (AI) and machine learning (ML)
- Provide reporting or business intelligence capabilities that are easy to use, dynamic, and configurable
Benefits of automated cloud accounting software
As you build your tech stack, incorporating cloud-based tools like automated accounting software allows you to access a multitude of benefits. These include:
Automated SaaS tech stacks
Automating your SaaS technology stack enables your department to achieve more in less time with fewer resources. One of the most important benefits of automation is that it paves the way to seamless and rapid scaling. A cloud-based accounting suite will help you proactively strategize and safeguard your performance during market downturns.
One of the most common complaints of accounting leaders is that there’s so much data gathering involved in reporting, forecasting, and other essential tasks. Role-based dashboards make that a thing of the past, giving every member of your team access to all the data they need the exact moment they need it. Say goodbye to manual data gathering forever.
With the robust SaaS tech stacks available to modern finance leaders, an invoicing error has become more than just a faux pas–you should regard it as inexcusable. Once you access touchless invoicing with Sage Intacct, you can rest assured that billing errors will be eliminated from your list of daily concerns.
ASC 606 and regulatory assistance
Government accounting laws and regulations have made operating a recurring revenue company increasingly complicated. With an updated and integrated SaaS technology stack, you’ll be automatically updated about regulatory changes in real time. If possible, any changes you need to make will be taken care of automatically. If that isn’t possible, you’ll be notified immediately of the regulatory change and your necessary next steps, so you never miss a beat.
Let’s take a deeper look at how finance teams use automated SaaS tech stacks to gain clarity and enhanced effectiveness around their KPIs.
3 essential metrics for your SaaS tech stack
One of your primary aims in optimizing your SaaS technology stack should be to enhance your team’s relationship with your company’s metrics. Below are three of the most beneficial KPIs and ratios to incorporate into your reporting and forecasting.
1. SaaS quick ratio.
This ratio offers a quick snapshot to investors about a company’s growth trajectory. To find this ratio, add your new MRR and expansion MRR for a given month, and then add up your churn MRR and contraction MRR for the same month. Divide the first figure by the second, and you’ve arrived at your SaaS quick ratio.
2. CLTV to CAC Ratio.
Your CLTV to CAC ratio is another helpful snapshot of how efficiently your company manages its growth. Your customer lifetime value (CLTV) measures how much each customer spends with you, and your customer acquisition cost (CAC) tells you how much you spend to acquire each new customer.
3. Churn benchmark figures.
Acceptable amounts of churn are generally determined by the size of your SaaS company. While benchmarks aren’t set in stone, some practical general guidelines are 3-7% monthly churn for small businesses, 1-2% for midsize companies, and 0.5-1% for large firms.
Accounting departments that rely on outdated manual methods will have a more challenging time using these metrics and other important KPIs to their advantage. Automation offers the best framework for interacting with your SaaS metrics.
Your SaaS technology stack is inarguably central to your company’s success. Teams who utilize accounting automation to its fullest potential can achieve more in less time and with less capital expenditure. Hear how Springbuk’s team scaled 400% while increasing gross margin 7%.