The SaaS P&L is critical to the management of your SaaS business. I talk about the SaaS P&L (profit and loss statement) almost every week with SaaS founders, finance, and accounting teams. At this point, I’ve reviewed hundreds of SaaS P&Ls (also called an income statement). I’d say about 90% of them are structured incorrectly, […]
How to Calculate Your Overall CAC Payback Period
Customer acquisition cost, or CAC, is a ubiquitous SaaS metric. It’s a core sales and marketing efficiency metric. CAC measures the amount of expense to acquire a new customer and the associated revenue from that customer. However, CAC as a standalone measure does not tell us much. We need context. This context comes in the […]
How to Assess Your CAC Profile
When I was a CFO at a private equity (PE) backed company, I was always a little envious of the PE folks. They got so many investment looks at different SaaS companies. And they built their SaaS muscle through the management of their SaaS portfolio companies. That’s changed now that I’m a fractional SaaS CFO. […]
Simple Financial Planning for SaaS Founders
The fourth quarter is traditionally “budget season.” For those in financial planning and analysis (FP&A), you may be cringing at reading the words budget season. I cringe when I think about the many budget memories and late nights at public companies. Is v.21 of the Board deck ready? Ugh. Founders, we are not going down […]
How to Calculate Your Cash Burn Rate
Cash is always king. Forget SaaS metrics…no, just kidding. Whether you are a startup or an established SaaS company, cash is always on your mind. It’s not just “do I have enough” cash. It’s also where in my company do I invest the cash. Understanding your cash burn rate is a critical factor in how […]
How to Benchmark Your OpEx Profile
When I review a SaaS P&L for the first time, I take a high-level approach to understand the financial health of the business. I break the P&L into two sections, the “top half” and the “bottom half.” The top half contains revenue, COGS departments and our gross profit. The bottom half contains our operating expenses […]
What Should Be Included in SaaS COGS
What should I include in SaaS cost of goods sold (COGS)? This is a very common question from SaaS founders and finance teams. It’s also an important question and something that you need to get right. The proper coding of SaaS COGS versus operating expenses (OpEx) is important for many reasons. First, we must understand […]
Financial Planning and Analysis | Key to Strategic Finance
As SaaS companies scale, there is an important function that must be added to your finance org chart. This function is the financial planning and analysis (FP&A) department. I rose through the ranks of the FP&A in public companies, so I have experienced all shapes and sizes of this critical department. Fundamentally, an FP&A team […]
SaaS Valuation Tips for Founders
SaaS valuations can be a tricky subject for founders. There’s a ton of info on the Internet, especially for public SaaS companies. Unfortunately, for private SaaS companies, there is only random valuation data and rules of thumb. There are no hard and fast rules that pinpoint the value of your private SaaS company. To help […]
The Role of the SaaS CFO
I speak with many SaaS teams who do not have a CFO or finance team yet. The focus is on product, go-to-market, and building out your team to support revenue delivery. Then, you’re at several million of ARR and realize that you can’t manage your business with just your bank account and poorly formatted and/or […]