Finance departments in SaaS Companies have drastically evolved in the last years. As SaaS is still considered a relatively new industry, much needs to be learned which goes for each department but finance is no exception. Initially I dare be so bold as to state finance departments were brought in for the sake of “dealing with the paperwork”. Nowadays finance departments are much more strategic. Finance expertise as a foundation to make investment decisions, funding decisions and IPO or M&A related items.
Finance also has much more roles than it had, going through some google searches and it shows that only 6 years ago finance on average had 3 departments, 1 is CFO/Head of finance, 2 is finance admin and 3 is risk and compliance. This is also much more spread in different disciplines. It’s again not only seen in finance, this is also seen in for instance marketing. Where we used to have general marketeers, we now have demand generation, performance marketing, branding, event management and this list goes on.
Finance is no different and as SaaS evolves, the economy evolves also we need to redefine what success looks like in Finance. Instead of listing all minor changes I want to start by the most drastic mindset change that in my opinion caused most of the new roles and that is finance is changed from only looking in the past. Finance was a department that reported about “what went down”. Now they still do that but also tell us what will go down, what routes we can take, what options we have and the budget we can make available to action on these decisions. Together with sales forecasts we can actually take more than just a guess to drive our business forward. So the forward looking aspect to finance is what turned it into a strategic role.
Finance moved from a bureaucratic necessity to the most strategic department in the company
In soccer teams have clear roles, there’s a coach on the sidelines, there’s a keeper trying to ensure the ball doesn't even reach the goal. The defenders are there to make sure the opposition cannot even get close to the goal. The midfields are in between the attack force and the defending forces, jump in to support and ensure transitioning and making the play. The attackers are forwarders ensuring we know what the goals look like and shoot for it.
Finance departments can be established under a similar principle:
- The CFO is the coach, the one making the tactics, setting up the team for success, defining the plays and is accountable for the team’s success.
- The Risk & GA keep out the danger, ensuring that no ball get’s dropped and risks are mitigated.
- The defense team can be found in Accounts Receivable, Accounts Payable and Billing specialist. They are there to ensure cash is always on the bank and there’s a clear view on what we can spend and that the DSO is low to ensure we have the means we need to succeed and don’t run on empty fumes.
- The Business control function are the ones looking both ahead in the future, working with the different functions to learn from what happens and provide analysis what will happen based off the history and work closely to get input from the defenders and the goal keepers and funnel that back to the coach and attacking forces. Explore more on how subscription management software supports business controls in their daily operations.
- The FP&A are the forwarders, keeping the eye on the price, running simulations and attack plays based on forecasted data, planning the financials in such a way that the goal is clearly visible to the entire organization and the coach can define the plays needed to run.
It’s obviously not a 1-1 comparison but we believe that with this soccer principle, you can build a finance team for success as you need gatekeepers and forward lookers in order to stay strategic but keep the door shut for revenue leakage! Learn more about how you can put your finance team in the front seat with the support of your finance tech stack in our blog. Take a deep dive into Younium product tour to discover why subscription management is single source of truth for daily operations in SaaS companies.
