Guidelines for SaaS firms to improve their finance tech stack
Believe it or not but finance is the lifeblood of digital transformation. This is because of the reason that without money, no business will ever survive. This is why experts lay emphasis on financial data readily available to support your business standing necessary for growth.
To allow digital transformation take its root within your finance team, make sure critical, consistent, accurate, and real-time data is accessible across organization’s finance team to understand the business from proactive lens.
Sadly, the finance team at today’s fast-growing SaaS business face unusual challenges such as –
- Close the books quickly.
- Support diverse billing scenarios of business based on subscription.
- Track deferred revenue.
And generate SaaS-centric metrics consisting of –
- Customer acquisition cost.
- Annual recurring revenue.
- Customer lifetime value.
The whole segmented features mentioned above is collectively known as finance tech stack – an integrated collection of software applications contributing to your business success.
What involves in the finance tech stack?
- Accounting/Enterprise Resource Planning (ERP).
- Financial Planning and Accounting (FP&A).
- Spend Management.
- Accounts Payable (AP)/Accounts Receivable (AR) Reconciliation.
- Financial Close.
- Equity Management.
It should be born in mind that creating an ideal finance tech stack is not like playing a child’s sports, given several pitfalls in this context can cause messy integrations that would hinder the progress of closing the books and ramify reporting packages.
Discussed in the following are some key lessons you can choose to undertake in the process of improving finance tech stack.
Build apps keeping in mind the future
It would be difficult to predict that building a tech stack for the future would afford conclusive results in favor, considering the action is tantamount to walking on a double-edged sword. For instance, if your developer is building an application but doesn’t consider how it will scale, adding some extra features to the app may be a likely solution but they would make it too odd to manage.
If you are choosing an alternative course like investing heavily in costly tools and services in anticipation of exponential growth in the future, you would be out of money by the time your application would ever find success in the market – if it ever does. Under such a dilemma, the best strategy is to start from simple, like web apps using open source tools. It is always prudent to gravitate toward something more viable technologies and languages when in doubt than risk loss by staking hopes on expensive alternatives.
Fine-tune your tech stack with needs analysis
The needs analysis refers to figuring out the core problems associated with your existing tech stack. Whether your business struggles to integrate cutting-edge yet mutually-garbled software solutions or it suffers an absence of standardization or transparency, the needs analysis is a must to get to the bottom of what needs to be done to fine-tune your tech stack. This involves identifying business processes currently functional, and those in immediate need of replacement or upgrade.
The needs analysis includes underscoring pain points and areas that would put your tech stack to unsavory risk exposure. Corrective measures prioritized thereof will ensure timely generation of values and savings. Be warned that your chosen software solutions must be intuitive, mobile-friendly, and can integrate perfectly with data sources and other applications of your software ecosystem.
Develop a strategy
Since you are already aware of the purpose of your tech stack, now figure out what tools you must have to meet your requirements consistent with your budget, features, and accessibility. Thereafter, develop a strategy to implement the tools. Remember that strategy must be consistent with your actual needs addressing your pain points and areas. For instance, a startup equipped with a single-person finance team and minimal corporate infrastructure would favor a stack allowing simplicity, seamless use, and scalability. Familiarity in this context matters a lot, considering trust mounts on software solutions you are already familiar with, such as QuickBooks for bookkeeping, etc. Visionary startups may choose to work with a software solution provider allowing them to address their biggest pain points first.
Implement wisely to build on your success
To build greater success requires identifying the biggest pain points first. Automate workflows in your financial close to mitigate the resources required to generate timely results and subsequently allow your team to work on rather more strategically important tasks. Leveraging machine learning could afford process automation and advanced analytics.