The SaaS finance tech stack is one of the most powerful tools for a company’s accounting department. Simply put, a fintech stack is the automation that Controllers and their teams use to optimise and streamline your accounting workflow in billing, invoicing, payables, and reconciliations.
As you’re building your stack, start the process with a definite sense of what you’d like it to achieve for you based on your stage and billing model. It’s essential that you avoid common SaaS accounting pitfalls such as:
The following five tips can help you build a fintech stack that’s efficient, effective, and boosts your company’s revenue for years to come.
Your general ledger (GL) is the foundation of your accounting department. It’s the source log of your SaaS company’s transactions and all the data surrounding them, such as customer demographics and behaviour, key SaaS metrics, and more.
Practically all companies use software-based GL solutions. But not all companies use fully automated ledgers, which is the differentiating factor between merely good and genuinely excellent fintech stacks.
Specifically, your GL should be able to:
Opening the books back up to correct an error in your GL is every accounting team’s worst nightmare. Avoid that scenario altogether by choosing an automated and streamlined ledger.
Being conscious of how your company bills its customers is crucial to setting up your tech stack.
Billing is the lifeblood of a SaaS company’s finance department, and CFO’s must know the answers to the following questions at all times:
Make sure your fintech stack helps you map your business practices around your most frequent billing use cases.
Revenue recognition is an accounting principle that requires companies to report their revenue when services are completed, not necessarily when cash changes hands.
To help keep companies honest about their revenue reporting practices, the Accounting Standards Codification (ASC) 606 (from the U.S.) was signed into law in 2014.
Under (ASC) 606 for instance, five fundamental conditions must be met for revenue to qualify as realised and reportable.
First, a contract must exist between the business and the customer. Second, that contract must outline the professional obligations of the company to the customer. Third, the price for the specified services must be explicitly stated. Fourth, the services must be rendered. Fifth, the revenue may be considered earned even if the payment has not yet been made.
Knowing your revenue recognition scenarios inside and out allows you to forecast and report more efficiently and accurately and will help you streamline your entire department.
Generally, a selling process exception is anything that goes “off script” during a sales encounter or makes it harder to close the sale.
Usually, exceptions come in the form of buyer objections or difficult questions. Knowing this allows you to track those sales exceptions over time and craft expert responses that can smooth over every single one.
Every company experiences sales exceptions, so look at them as opportunities for growth rather than as sources of frustration.
Your fintech stack should enable you to automatically and instantly share ideas for selling exception responses between team members and departments. The finance team may have ideas that would benefit the sales and marketing staff and vice versa. Trust between departments on what is important, and how to both win business, and have it be financially appropriate for the company, is key to scale.
Compliance is one of the most crucial aspects of your fintech stack. A compliance slip-up can cause enormous headaches for an otherwise well-run company.
Make sure your fintech stack has everything you need to keep you from being audited or receiving unwanted regulatory attention in some other manner. The more data is in one place, with less reconciliations, the easier it is to pass an audit.
Also, double-check that your fintech stack takes other compliance issues into account, such as those surrounding taxes, international subsidiaries, and so on.
As a SaaS CFO, your fintech stack is one of the major business components on which your success hinges. Making the right choice is more than a gift to yourself: it’s a gift to everyone who works with you.
To learn more about building your fintech stack, check out this webinar from 2022’s Modern SaaS Finance Forum.
The Akuna Solutions Team