It’s no secret that software as a service (SaaS) is one of the hottest industries in the tech world. In fact, the global SaaS market is anticipated to develop USD$702.19 billion by 2030 at a compound yearly growth rate (CAGR) of 18.82% during the forecasted period.
With such rapid growth comes increased pressure on SaaS companies like yours to be efficient and profitable. One area often overlooked in terms of efficiency is the finance department. This sector is responsible for crucial tasks, such as invoicing, billing, payments, collections, and financial reporting.
With so many moving parts, it’s easy for things to get lost in the shuffle and for inefficiencies to creep in. This could lead to delayed payments, uncollected revenues, and a whole host of other problems which affect the bottom line.
Fortunately, there are a few things you can do to streamline your SaaS finance operations and make everything run more smoothly. Here are some ways to get started:
Outsource A CFO Service
Sometimes, you get easily bogged down by the day-to-day tasks of managing finance operations, and you don’t have the time to focus on strategic initiatives that can help the business grow. In this case, outsourcing a virtual chief financial officer (CFO) can be a game-changer.
Other entrepreneurs might be thinking, why hire a virtual CFO when you can add a full-time job finance headcount? The simple answer is cost. A virtual CFO is a fractional or part-time professional that provides strategic financial guidance and advice on an as-needed basis. That means you only pay for the services when you need them, not a full-time salary, which can save you money in the long run.
Their services include reviewing and revising your financial model to forecasting cash flow and assisting with M&A transactions, also known as Mergers and Acquisitions. Handing some of the finance operations to a virtual CFO can free up your time to focus on other business areas.
Implement An Automated Billing System
Billing is one of the most critical but time-consuming tasks in the finance department, as it directly affects your company’s cash flow. For example, manually processing invoices and payments can be a source of problems. Such issues include inputting the wrong information or forgetting to send invoices on time. Other times, it might result from waiting on approvals from upper management.
You can automate your billing system to avoid these delays. That means setting up a system where invoices and payments are processed automatically. Automated billing systems can handle much of the grunt work, such as issuing invoices, calculating late fees, and sending payment reminders. Not only will this reduce the likelihood of human error, but it’ll also speed up the entire process. As a result, you’ll get paid faster and improve cash flow.
Conduct An Audit Of Your Financial Processes
Some inefficiencies might not be as apparent as others. Or even if you have an organized finance system, there might be areas where you can still improve. After all, your finance operation method might change as your business grows. The strategy that worked for a 10-staff company might not be as effective when managing a team of 100. That’s why it’s essential to audit your financial processes periodically.
Conducting an audit will help you identify any bottlenecks where things are falling through the cracks. For example, if you’re inputting data into different software programs, you might want to consider consolidating them in one central place. Using multiple systems could lead to duplicate data entries or documents, wasting time and resources. By auditing your financial processes, you can tweak and make changes to streamline them.
In the past, most financial documents were paper-based. But as businesses become more reliant on technology, there’s been a shift to digital documentation. This is thanks to the rise of cloud-based software, making it easier to store and access data from anywhere.
Making the switch to digital documents can help you simplify your finance operations. For instance, you can use e-signatures to sign digital files electronically. This is faster and more secure as it eliminates the need to print, sign, and scan them. All it takes is a couple of clicks, and you’re done. This method is an additional perk if you’re working with clients or vendors in different parts of the world.
Managing a SaaS business is no easy feat. There are many moving parts, and the finance department is responsible for a large chunk of that. Without a well-oiled finance system, your business will quickly grind to a halt.
Follow the tips outlined in this article to streamline your SaaS finance operations and make your life easier. So, take the time to implement these changes and see how they can help your business run more smoothly.