Redefining SaaS procedures
We analysed historical data and calculated SaaS KPIs to facilitate strategic decision-making and investor dialogues.
Company profile
Market-leading data aggregator providing services to a variety of clients, including prominent global giants in the technology industry
Our client was an established SaaS company seeking to improve their financial reporting mechanisms. The core element of this was to gain a better understanding of historical customer behaviour to create a detailed financial model to help inform pivotal business decisions.
Proceeding with a fundraising initiative was also a key medium term objective. It therefore became imperative to start reporting primary SaaS KPIs and optimising the process for maintaining this information on an ongoing basis.
This project involved two separate stages:
- Integrated financial reporting and forecasting – tidying up our client’s historical financials and then streamlining into a SaaS Profit & Loss (P&L) format to allow seamless calculation of key metrics in real-time ; and
- Financial reporting board pack automation – refining our client’s accounting procedures and connecting directly to their source systems to ensure the quality of financial information would be maintained in subsequent periods.
1. Integrated financial reporting and forecasting (2 weeks)
Problem
The finance function experienced challenges in managing vast amounts of data stored across multiple systems. Given the desire to raise funds in the medium term, our client needed better insights from their historical data. The most important task was to understand how investors would analyse their business so that they could optimise for these key data points ahead of a funding round.
During the tender process, the company was deciding between an off-the-shelf FP&A software or commissioning a custom-made solution designed specifically for their requirements.
Solution
The client selected Finomatic Consulting due to our expertise in the technology sector and the ability to build bespoke tools. We collaborated closely with the finance director to meticulously dissect and tidy up their historical financials.
The final output of this project was to construct an advanced three-statement financial model with interactive SaaS-specific visuals for their monthly board meetings. We streamlined their reporting into a SaaS P&L to allow them to calculate industry-specific metrics seamlessly. The inputs and assumptions of this model were based on robust and auditable data pulled directly from their source systems.
Our solution combined data from:
- Sage
- HubSpot
- Bamboo HR
- Payroll reports
Impact
Our bespoke tools have been transformative. The client is now able to scrutinise historical patterns and unearth new insights. This helps to:
- inform future business decisions ;
- ensure an enhanced level of accuracy in forecasts ; and
- calculate Key Performance Indictors (KPIs) in an efficient manner.
The client benefitted from the guidance of our industry expertise. This ensured that their reporting structure was optimally aligned with the expectations and requirements of potential investors in the technology sector.
Finally, these tailored solutions were delivered without the burden of recurring licence fees – a common concern with off-the-shelf software solutions.
2. Board reporting automation (2 weeks)
Problem
Data management challenges made it difficult for our client to determine recent trends in their key SaaS metrics such as: Customer Acquisition Cost (CAC), Lifetime Value (LTV), Annual Recurring Revenue (ARR) and Retention. It was critical to calculate these metrics time-efficiently so that they could make more informed data-driven decisions and facilitate conversations with potential investors.
There was, therefore, a requirement to transition away from manual data compilation tasks and instead focus efforts on building an efficient data assimilation and synchronisation process.
Solution
After cleansing the historical data, we systematically evaluated and refined their accounting procedures. This ensured that the quality and accuracy of financial information would be maintained in subsequent periods. We achieved this by connecting directly to our client’s source systems, meaning the monthly refresh process would be as smooth as possible.
The final output of this project was the production and automation of all financial analyses required for quarterly board meetings.
Impact
Our client can now instantly assess the implications of changes in their pipeline alongside various business scenarios. This showed how different decisions and external factors would affect revenue and cash.
The management team can also efficiently produce clear analysis on a SaaS KPI basis, which enhances board reporting and aligns with the expectations of potential investors.