July 28, 2022

Scaling Your B2B SaaS Business With Financial Planning and Analysis

Mandy Leavell
Director of Marketing

Scaling Your B2B SaaS Business With Financial Planning and Analysis

Your ability to scale your software as a service business and keep more customers coming in depends largely on how you handle your business numbers. Without financial planning and analysis, growing your SaaS business may only be wishful thinking. 

This post will explain the value of FP&A, why your business-to-business SaaS needs an effective FP&A process, and how to do it. To help you handle startup financial planning and analysis, we'll also outline the best software tool to make informed business decisions.

What Is Financial Planning and Analysis?

Financial planning and analysis gives you correct numbers and an understanding of your market. It's about reporting your business performance, budgeting, forecasting, and tracking your performance against your key performance indicators. The goal of FP&A is to maintain your business' financial health.

FP&A doesn’t start and end with your finance department or your revenue from sales. It includes various teams in your organization, including marketing, sales, human resources and operations. 

FP&A is not only for Fortune 500 companies. Startups like yours need an effective FP&A process to grow and thrive. Depending on your company's size, you may assign FP&A to a team of financial analysts and data experts under your chief financial officer's supervision. Alternatively, you can outsource your SaaS financial planning and analysis to third-party financial partners. 

It doesn't end there. KPI Sense can help you automate your planning process.

The following sections will explain how FP&A benefits your business and helps you scale your B2B SaaS. You’ll also discover the challenges you might expect to face in managing FP&A effectively.

Unique SaaS FP&A Challenges

Before the concept of selling subscription-based software became popular, businesses sold one-time licenses, with repeat payments only in the form of maintenance and software update fees. In those days, bookkeeping was more straightforward.

Today, with software as a service, revenue comes from new and repeat consumers. Metrics like customer satisfaction, lifetime value, and annual recurring revenue play a significant role in your success.

These new complexities have made spreadsheet-based FP&A time-consuming and error-prone. Tracking your finances with multiple spreadsheets is a surefire way to end up with duplicate and missing data, which is not a recipe for business growth.

Benefits of FP&A for B2B SaaS Companies

Effective FP&A helps you set goals and accurately forecast your future. In addition, here are five advantages of FP&A for your B2B SaaS company.

  • Informed decision-making: A correct and consistent FP&A process for your B2B SaaS provides the numbers you need to figure out your business revenue, operational costs, and how they align with your goals. This understanding removes the guesswork and allows you to make data-driven and informed decisions.
  • Better customer experience: FP&A goes beyond cash flow reporting to report on all areas of your business, including marketing, human resources, and customer experience. This information will enable you to improve cross-team performance, including your customer retention.
  • Better customer pipeline: FP&A enables you to review your pipeline performance against your budget and previous assumptions. It lets you make new and better predictions, identify the risks your business might encounter in the future, and effectively manage them.
  • Streamlined operations: FP&A doesn't end with revenue and sales. It can help you understand your workforce and its impact on your overall business goals. Streamline your people, processes, and tools to achieve your business goals.
  • Faster growth and scaling: With a successful B2B SaaS financial planning process, you can gather all the information you need from your business data to make informed decisions on growing and scaling your B2B SaaS, managing risks and challenges that may arise.

How do you handle FP&A for your B2B SaaS business? We'll outline everything you need to do, step by step, below.

How to Conduct FP&A as a B2B SaaS Business

Follow these three steps to conduct a thorough FP&A process for your SaaS.

1. Financial Reporting

The reporting stage is where you tell your business' financial story. The first step in FP&A is gathering information across every part of your organization, including accounting, HR, operations, sales, and marketing. Here, you'll want to collect the raw data to understand the goals your team achieved. You'll also need to identify any targets you missed and what happened to cause the shortfall.

It is easy to overlook crucial data points while trying to report on your business' performance. We've discovered that asking the right questions can get you started on the right track.

Here are five questions to answer to help you gather data and report effectively:

  • What data do we need?
  • What details are we missing?
  • Where can we learn more?
  • Who is the custodian of this data?
  • What tools store this information?

These questions will allow you to understand where to look, who to ask, and what to add to your company's financial story. 

2. Budgeting and Planning

Though many people dread budgeting, it's essential to identify the assets you need to achieve your stated goals.

A formal financial budget for your SaaS enables you to understand how to allocate resources in your organization. It also provides you with a basis to measure your performance and return on investment.

Create a formal, specific budget for each department and operation in your organization. Also, share it with your team to ensure everyone is on the same page.

3. Financial Forecasting

Financial forecasting is the last piece in the financial planning and analysis puzzle. Forecasting is where you make all the assumptions needed to guide your goals, budgets, and how you plan to scale your B2B SaaS. The conclusions you draw affect all departments and operations in your company. 

For example, your forecast can decide the number of new hires you need to meet your goals. Market predictions, customer behavior, and expected pricing also influence your revenue projections and your strategy for achieving your goals. 

Understanding Your B2B SaaS Company's Current Growth Stage

When is your SaaS business ready for scaling? To scale successfully, you need to understand your current B2B SaaS growth stage and where you hope to be in the future.

Trying to scale your business at the wrong time might cause various setbacks.

Your B2B SaaS undergoes four different stages, each of which has a different focus.

  • Pre-startup
  • Startup
  • Growth
  • Maturity

For example, in the pre-startup and startup phases, you’re still trying to position yourself in the market and attract paying clients. Here, you're still trying to understand your customer lifetime value, your cost of acquiring a customer, and how they determine your business cash flow. Implementing growth strategies in these stages can adversely impact your business.

You’re only ready to scale when you reach the growth stage. At this point, you have identified a product market fit and acquired a healthy customer base that pays you every month. It's time to expand your operations to drive more sales.

Incorporating FP&A Into Your B2B SaaS Growth Strategy

Use your FP&A report to design your SaaS company's growth strategy, or the tactics you use to scale up your business. Your goals might include entering a new market, increasing your market share, or introducing a new product line.

How do you incorporate FP&A into your SaaS growth strategy? An effective financial planning and analysis process will enable you to make accurate forecasts and budgeting to help you make informed growth plans to scale your business. 

Use the outcome of your FP&A process to determine whether you need funding, and if so, how much. In addition to that, your forecast will help you anticipate market fluctuations, which you can add to your plan.

Leveraging FP&A Forecasting to Inform Strategy

To make FP&A a pivotal part of your strategy process, use it to inform what you need to do to achieve your goals. Otherwise, you may spend your resources putting out fires and reacting to market changes instead of proactively scaling your business. 

Leveraging FP&A puts you in the driver's seat with your growth plans. As you know by now, your forecast shines a light on the future and lets you manage growth.

For example, you could use your forecast to anticipate a new competitor entering the market and driving your prices down, or the emergence of new policies that may affect your operations or business revenue. 

With effective FP&A, you can predict all these factors and use them to shape your growth strategy. 

For example, if your forecast anticipates more competition in your industry, you may decide to increase your marketing budget and build brand awareness. Or, you could invest more in research and development to give you a competitive edge with improved product quality and features.

B2B SaaS Revenue Growth Through FP&A

To grow your revenue, you need to incorporate FP&A forecasting to ensure you make accurate projections, plus create a budget to help you meet them. 

Financial planning and analysis helps you understand what's working and what you need to tweak, and review how your organization performed against previously set goals. 

When done properly, FP&A provides an understanding of your marketing, spending, operations, and expectations to help you allocate resources, grow your revenue, cut costs, increase sales, and therefore improve your overall margin.

Using FP&A to Guide B2B SaaS Scalability

Growth doesn't happen overnight, but you can use FP&A to guide your B2B SaaS scaling process. Gather information from all areas of your business to understand where you've been and where you're heading, using data at every stage.

Your revenue and FP&A forecast will enable you to understand how fast you can scale by investing more resources into marketing, human resources, or R&D for your product.

B2B SaaS FP&A Challenges

Besides the failure of spreadsheets and disjointed data sources to help you make effective financial planning, budgeting, and forecasting, you may still have another B2B SaaS scaling challenge.

In larger organizations, the chief financial officer and their team conduct FP&A monthly, quarterly, biannually, or yearly, depending on their specific needs. But hiring these employees to help you carry out these tasks can be too expensive for you as a startup. Without these staff members, how do you conduct FP&A?

Fortunately, you don’t have to hire a CFO or a team of expert accountants to conduct effective and continuous financial planning and analysis. Teams of experts like those at KPI sense can effortlessly understand your business data, budget, and make accurate forecasts. 

FP&A Solutions for B2B SaaS

For you to understand your business data and make accurate forecasts for your business, you need financial reporting tools that can help you aggregate, organize, and analyze.

The right team will enable you to automate your FP&A SaaS data aggregation, integration, validation, and analysis. By eliminating manual effort, you can make accurate forecasts that drive your business growth while having enough time to focus on business operations to execute your plan. 

Imagine reaping all these benefits without the expense of hiring a CFO, a team of financial analysts, and the work associated with juggling spreadsheets and reconciling errors.

Here's what to look for for in choosing the best FP&A solution for your B2B SaaS company.

  • Populating templates automatically: Your platform should let you populate data on templates. It should also enable you to give different levels of access to your team.
  • Sharing reports and data easily: You need the ability to share reports, forecasts, and budgets with your team, thus making it easier to bring everyone into the planning and execution process for your B2B SaaS company.
  • Intuitive and user-friendly dashboard: Your dashboards should be readily understandable, without a steep learning curve. Spend less time figuring everything out and more time acting on the information you’ve gathered.
  • Ease of onboarding: To enable you and your team to start making sense of your data from Day One, your FP&A solution should be easy to set up and use right out of the gate.
  • Automatic integration and updates: To make your analysis reliable with real-time data, your tool should easily integrate with all your data sources. It should also automatically update information from these sources.
  • Keen insight: For you to make sense of your business data and take the appropriate steps, your platform should provide instant insight at all times. 
  • Scalability: As your B2B SaaS financial analysis needs grow, so should your FP&A solution.

Choose KPI Sense for Metrics That Matter 

The FP&A process relies on understandable data, but the more time you spend compiling and analyzing information, the less time you'll have to work on your business growth strategies. Using a financial analysis process designed for SaaS companies' unique needs can prevent headaches and let you return to focusing on your day-to-day operations.

KPI Sense is a SaaS-specific financial planning solution that understands traditional finance and budget requirements and key SaaS metrics. We help you make your financial data a business asset.

With KPI Sense, you can track SaaS KPIs across your organization and carry out reporting, budgeting, and forecasting to inform your SaaS growth strategy. When you start with KPI Sense, we also pair you with a financial expert who will help you gather valuable insights from your business data. 

Contact us today to schedule a demo or learn more about how you can use KPI Sense.

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