Software as a Service (SaaS) and recurring revenue companies must prioritize efficiency to fuel growth, yet resource allocation can be challenging. Outsourcing finance through Finance as a Service (FaaS) streamlines back-office functions, freeing up resources to unlock new growth opportunities.
Just as the recurring model disrupted the enterprise software marketplace, FaaS is revolutionizing how modern companies build their finance & accounting teams, freeing leaders to focus on what they do best.
FaaS solves the recurring challenge of managing revenue growth by providing a team of professional finance experts and enterprise-level accounting software. High-growth and investor-supported SaaS companies can benefit from FaaS because they are easy to deploy, cost-effective, and scalable for growth.
What is Finance as a Service?
FaaS is an agile service delivery model through which SaaS companies can outsource their entire finance function, including personnel and accounting software.
FaaS can help SaaS businesses to improve cash flow, optimize business performance and strengthen financial management. It typically offers automation of time-consuming tasks for finance department personnel such as general ledger, billing, accounts receivable, and payable.
FaaS typically covers three areas:
- General Ledger
- Accounts Receivables and Payables:
- Billing
Automating these core functions reduces the need for human intervention and ensures that all transactions are accounted for accurately in real-time. This also offers companies a high level of control over their data, including access rights and security settings, and reduces recovery time when errors occur.
Advanced FaaS Services
Aside from the basic outsourced bookkeeping, the best FaaS providers also offer more advanced services including:
Controller-level Compliance and Reporting: SaaS businesses can use FaaS to automate controller-level compliance and reporting requirements. SaaS companies that need this type of service should ensure they work with a FaaS partner who offers a variety of services, including:
- Sarbanes Oxley (SOX) compliant reports
- XBRL reporting
- Sustainability reports
- General ledger
- SaaS financial metrics reporting
Financial Planning and Analysis (FP&A): SaaS businesses can use financial consulting services for expert support with FP&A. Companies that need this support should work with a partner who offers a variety of services, including:
- Projection modeling
- Financial forecasting
- Strategic capital allocation
- SaaS-specific financial KPIs and metrics reporting
Strategic CFO Support: Many FaaS providers also offer CFO services to provide a higher level of support with financial operations on an interim or ad hoc basis. These services should include:
- Strategic planning and budgeting
- Financial analysis
- SaaS financial metrics reporting
The Importance of Accurate and Timely Financial Reporting
Investor-backed SaaS companies are expected to produce monthly financial reports. If reporting is consistently late, or inaccurate, it will damage the company’s credibility, relationship with investors, and possibly its ability to further raise capital.
FaaS automates and reduces the possibility for error in the reporting process. Here’s how:
- The SaaS company creates an invoice template that they send to the customer every month and then input it into their FaaS provider for processing.
- The system integrates with the company’s other software and processes the invoice, then sends it to their bank account for payments.
- The system generates a report showing how much was paid per customer.
The best FaaS software can also be used to produce other reports like sales forecasts or ratios from historical data.
The Benefits Of Financial Reporting
Recurring revenue businesses need accurate forecasting and income reporting to ensure they’re tracking toward performance and growth goals.
However, SaaS companies often do not have the financial background or expertise to perform these tasks themselves. Instead, FaaS provides the expertise tech stack to enable:
Increased Cash Flow Management: Regular access to financial statements helps manage cash flow and better keep track of who receives how much.
Standardized Financial Reporting: FaaS solutions standardize the financial reporting process with automated and proven systems.
Improved Financial Performance: SaaS businesses with financial expertise in place can forecast more accurately for better planning.
Better Debt Management: SaaS companies that are financially healthy and better understand their financial performance will manage their debts more effectively.
Trend Identification: Automated, timely, and accurate financial reporting can be used to identify performance trends and make better decisions about where spend is allocated.
Revenue Recognition: SaaS businesses can determine when to recognize recurring revenue through their financial statements and ensure that income is being collected accurately.
Integrating FaaS With Key Business Systems
SaaS companies have various critical business systems they need to integrate with, such as CRM, ERP, billing, and accounting. FaaS solutions can automate and integrate these disparate systems for greater efficiency, lower cost, and improved profitability.
Integrating FaaS with CRM
Finance as a Service (FaaS) can be integrated with customer relationship management (CRM) software to better manage revenue growth and forecast future revenues. Integrating customer data with finance software provides a full-circle customer view to make better decisions on future product pricing.
Integrating FaaS with ERP
SaaS companies can leverage finance as a service to better manage their business operations and grow. FaaS provides the tools for financial management, budgeting, forecasting, reporting, and analysis of company data – all without needing costly internal resources or hiring an expensive CFO.
Integrating FaaS with an ERP system can also be used to calculate the profit margins on a single transaction.
Using Cloud-Based FaaS Platforms
The concept behind FaaS is that it provides software tools, such as invoicing and billing applications, which are pre-built and easy to use via a web browser or an app on mobile devices.
Rather than building these from scratch, SaaS companies can integrate FaaS into their applications to reduce time spent on repetitive tasks and focus more on building their core product or service.
The SaaS company pays a monthly fee for access to these prebuilt software tools rather than hiring staff with financial expertise in-house. This is more cost-effective and gives SaaS providers access to these tools where and when they need them.
Cloud-based FaaS platforms provide offer the most efficient way of automating repetitive finance tasks. For example, Consero’s SIMPL cloud-based FaaS platform automates and manages transactional processes so that businesses can focus on building their core product.
SIMPL Features
SIMPL was explicitly designed to be a SaaS company’s one-stop-shop for all financial needs. Below are some of SIMPL’s main features and benefits:
Cloud Accounting Software: Cloud accounting software separates you from the drudgery of repetitive financial tasks, automates processes, and empowers greater insight into your business performance.
Customer Invoicing and Vendor Billing: SIMPL lets users monitor accounts payable and receivable from a remote location and approve vendors’ bills and release payments. You can also send customer invoices, have access to outstanding customer invoice status and collection efforts, all of which will help your organization get paid faster.
Employee Expense Approvals & Payments: SIMPL enables you to approve and pay employees’ expense reports on the fly and monitor whether an employee is authorized or not to spend money from their accounts.
Task Management & Workflow Software: SIMPL offers the ability for employees to plan their days with different types of scheduled meetings – all from one location. SIMPL also provides support for a wide variety of recurring processes, including multiple concurrent ad-hoc requests. Regardless of how many inputs there are, all the financial outputs will be delivered on time with any data recorded and tracked ad hoc processes.
Graphical Metrics & KPIs: Easily visualize and communicate the performance of your business with KPIs that can be tracked through dashboards. This data can help you make swift, informed decisions so you can grow your business efficiently.
Benefits of a Cloud-Based FaaS Platform
Combining pre-integrated software with specialized financial expertise, SIMPL is a scalable solution delivers substantial, ongoing benefits in as little as thirty days, including:
- Reduced overhead costs and the risk of delays
- Streamlined processes
- Improved collaboration with stakeholders, partners, and clients
- Freedom to focus on what matters (such as customer acquisition and retention)
Conclusion
Finance as a Service modules allows SaaS companies to better manage their finances by automating accounting, invoicing, and collections. As a result, SaaS companies can focus on higher-margin revenue streams such as consulting services or integration opportunities.
For investor-backed SaaS businesses, Consero’s FaaS model has also been precisely calibrated to deliver the exact reporting outputs that investors expect. With timely and accurate reporting, we provide the financial clarity needed to propel your business forward.
