In two recent podcasts (one with a Finance leader from Zendesk, the other with a leader from Freshbooks and Zuora), we explored the new mindsets Finance teams need to keep up with SaaS 2.0, including these four key tenets: 

1. Build in flexibility, early on
2. Embrace the reality of Sales
3. Foster a closer relationship with RevOps
4. Anticipate complexity when calculating ARR, now and later

The tools and processes most Finance teams use were built for a previous era of SaaS — one where direct sales dominated (versus today, where product-led and sales-led growth both have roles to play), pricing models were not as complex, and software wasn’t deployed with a lot of configurability. 

But SaaS 2.0 brings new dynamics that have massive downstream impacts on Finance: 

• PLG models are rapidly growing. In a world where the user and product drive revenue (not just sales!), Finance teams now have to work with new metrics for everything from acquisition costs to revenue recognition.
  
  
• Companies are doubling down on land-and-expand motions. Tracking customer expansion, renewals, and upsells is now critical for success. But without the right tech stack and data integration, this becomes a manual process, often done in spreadsheets.
  
  
• Pricing complexity is the new norm. Many companies support multiple GTM motions, monetization streams, and pricing models. Getting to accurate ARR forecasting, billing, and revenue recognition requires a common data model and visibility across all functions.

1. Build for Flexibility, Early On

“In my earlier days, we didn't necessarily think about flexibility in quoting tools because we didn't anticipate all of the future complexities in our product offering and pricing and packaging,” says industry expert Christina Liu, former Zendesk exec and current Chief Accounting Officer at Confluent. “We hit a certain point where my team spent a lot of time undoing some of these things that were done to get a quote right.” 

Are your tools future-proof? Monolithic configurations of yesterday don’t work anymore. Even if you start with one sales motion, you need flexibility in tooling across the entire GTM engine to accommodate additions as you go upmarket.

“The monolithic configurations of yesterday don’t work anymore.”

Tip: To build for flexibility, use the 80/20 rule: Understand your current sales motion. Then, anticipate the type of market you want to tackle in 2-3 years and look for a tool that solves at least 80% of your future use cases, and provides the flexibility needed to configure. 

2. Embrace the Reality of Sales

Quoting, contract management, Deal Desk — these all have direct downstream impacts on Finance. If your quoting tool doesn’t help Sales easily spin up customized, complex quotes, the Finance team is saddled with inaccurate data. 

Without an integrated view between Finance, Sales, and Legal, a bottleneck is created around Deal Desk — lots of siloed information, with a very narrow translation process to get it all on the same page.

And then there’s the lack of consistent contract management. If your Finance team can’t see upsells and license changes that the rest of the team makes in real-time, they can’t bill accurately, and have to use headcount and sift through information to make sure everything is correct.

Tip: To embrace this Sales reality, pay attention to their quoting tool. It should help Sales teams close deals faster, easily spin up custom quotes, reduce data inaccuracies, and give you instant visibility into revenue implications. If Sales teams are doing manual calculations for quoting, your tool isn’t built for SaaS 2.0.

“If Sales teams are doing manual calculations for quoting, your tool isn’t built for SaaS 2.0.”

3. Foster a Closer Relationship With RevOps

“Finance is probably the department I get along with the best and I spend the most time with,” says Matt Curl, GM of RevOps at Checkr, who we spoke with last month about the relationship between RevOps and Finance. Leveraging this important relationship allows both teams to get synced up on what data matters and make sure it’s accurate.

RevOps can provide expertise in streamlining data collection across teams and ensuring the accuracy of data inputs for Finance-related processes, including revenue recognition. They can also serve as advocates for the Finance team, focusing their attention on data and information required to perform accurate financial analysis, forecasting, and reporting.

Given their (ideally) cross-functional span, RevOps teams should be equipped with the tools needed to get a deep understanding of the customer journey and how it’s shifting across upsells, renewals, and expansion. This, in turn, allows them to contribute valuable insights and considerations when calculating ARR. RevOps can provide visibility into usage-based pricing models, expansion strategies, and the evolving needs of customers throughout their journey with the company.

“Given their (ideally) cross-functional span, RevOps teams should be equipped with the tools needed to get a deep understanding of the customer journey.”

Ultimately, building a closer relationship with RevOps enables Finance teams to optimize data collection and handoff processes, and improve overall operational efficiency in the face of SaaS 2.0’s increasing market complexity.

Tip: Try implementing a standing sync call between RevOps and Finance to consistently get on the same page. 

4. Anticipate Complexity When Calculating ARR, Now and Later

If your company has usage-based pricing or customer expansion tools, Finance teams should adapt their calculations around these complexities. But how do you ensure that the numbers are accurate?

Implementing a tool that automatically updates ARR figures for expansion revenue, preferably integrated with Salesforce, can greatly contribute to ensuring clean, accurate numbers. Working to find the best usage collection, rating, and billing system tied to direct sales quotes can also alleviate a lot of manual crunching to get to the invoice — and inaccurate analytics. 

“Whatever the complexity is, you need to be able to configure your tool so it can be reported and ingested accurately by the downstream system,” says Liu. Dirty data from upstream processes on downstream tools will lead to repetitive, manual efforts and long-winded attempts to rectify your data. Inefficient processes and reliance on spreadsheets will create data integrity issues and impede scalability.

Tip: The SaaS 2.0 mindset is all about accurately understanding your current business, as well as anticipating future complexities as you scale. As such, you should particularly consider flexibility and configurability when evaluating RevRec solutions.

By acknowledging the challenges faced by Finance teams, like the burden of reconciling data, and the potential risks associated with inaccurate quotes, companies can prioritize investing in a tech stack that synthesizes hand-offs, form a closer relationship with RevOps, and understand ARR calculations for their company’s current business model, as well as future growth. 

With these strategies in place, Finance teams will be able to more effectively navigate the complexities of the SaaS 2.0 market, improve accuracy in revenue recognition, and work towards a world in which their lives aren’t controlled by haphazard, out-of-date processes. 

For more on how to bridge the gap between Sales and Finance, check out our guide on How Sales Quoting Tools Can Sink your Finance Team, and how to fix it.