SaaS sales and finance collaborate together in planning, forecasting, and day-to-day sales management issues. That collaboration can be smooth and extremely productive, or there can be less productive friction. Working with hundreds of SaaS and software finance organizations to collect and benchmark key sales-related metrics, we’ve seen some best practices that tend to make the collaboration work well.
In the traditional, pre-SaaS world, sales and finance had somewhat different missions. Sales’ focus was on producing revenue and finance focused on profitability. There was a sense of two different missions, producing creative, or not so creative, friction. In the extreme, sales was viewed by finance as slightly out of control and extravagant, needing to be reined in, and finance was viewed by sales as bean counters who were obstacles to what sales needed to do to bring in revenue. Finance typifies a culture of rule followers/rule makers, sales culture rewards the end result over process.
In the SaaS world, sales is focused on acquiring, retaining, and expanding customer relationships, and finance is focused on watching/managing the balance between growth and gross profit. Both need to focus on efficient sales growth and base decision-making on data. In the SaaS world, finance’s role, and culture, is more aligned with sales. Finance works to be a business partner to sales while collaboratively providing some data discipline to keep revenues growing efficiently.
The two organizations are far more integrated in terms of mission, functional responsibilities, and data today. Areas where SaaS sales and finance have intersecting responsibilities to collaborate include:
In the past, sales produced the forecast and finance was dependent on sales’ forecast for planning and expense management. In the SaaS world, finance produces the forecast but pulls from sales data. Both benefit or suffer from the quality of the data in the CRM system.
A few best practices that we’ve seen with successful growth companies to achieve better SaaS sales and finance collaboration include:
Communication: Ensure regular communication both at the executive (CFO to head of sales) level and the manager level. Too often, finance and sales communication goes mostly through the top executives instead of at all levels of both organizations. Establish a buddy system, have sales reps work directly with a finance professional.
Proximity breeds familiarity: Have finance and sales sit together; don’t isolate in different parts of the office or building.
CRM data: Requiring full deal information in the CRM before invoicing accounts and compensating reps goes a long way to incenting good data hygiene from the reps and helps finance have better data for win/loss reports and forecasting.
Common definitions of key terms and metrics: Make sure that everyone means the same thing when they talk about retention/churn, customer lifetime value, numbers of customers, sales cycle, conversion rates, etc. Document how the company defines these key metrics and share.
Common metrics’ calculation: Ensure that both organizations are calculating key metrics in the same way. Sounds obvious, but frequently, it’s not the case—finance usually defines retention based on the invoice dates, whereas sales may calculate churn based on a more liberal definition of retention.
DealDesk: B-2-B SaaS companies with complex, high-value, and competitive deals implement a deal desk to help close deals. We find more and more deal desk responsibility sits in finance and not in sales ops. Finance has the discipline to define when and what deals get submitted to the deal desk and manage a clear process. In addition, finance has the analytical capability to analyze deal data to improve deal structures.
Growth SaaS companies can’t afford the inefficiency caused by a lack of communication and friction between finance and sales. As sales becomes more data-driven, and finance is more growth oriented, cultural and communication barriers are breaking down to support better collaboration. The SaaS model requires consistent collaboration in myriad areas from sales and marketing to customer experience to product, with finance providing the metrics, analysis and guidelines to keep everything on track.
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