How to automate SaaS Finance

operations - A framework
Preface
A SaaS company goes through 4 stages
of evolution and expansion. During each
stage of rapid expansion, the revenue
workflow or the operational plumbing of
any organization tends to crack in a few
places. According to a report published
by IDC, revenue loss due to such
inefficiencies can be as much as 20-30%
As an organization scales, the finance
workflow becomes more critical and more
susceptible to even the smallest errors
and inefficiencies. The brunt of expansion
is heavier on the finance teams since their
tasks directly impact the revenue flow.

01
Declining Efficiency in Acquisition
When businesses are unable to capture the opportunity that’s available to them and
convert it into revenue, they have an inefficient workflow. The reasons for this can be
changing sales cycles, or friction in the user experience like not offering preferred
payment methods.

Increasing Revenue Churn

When inefficiencies prevent a business from expanding, customers churn out. Actively
managing, predicting, and preventing customers from churning is something that
businesses still struggle with. It’s possible to mitigate churn through automation.

Compounding Manual Errors

The time and effort spent on manual reconciliation of stale data cost finance teams
more than just money, that could otherwise be spent on financial planning and strategic
business analysis.

Rising Costs of Expansion

As the customer base of businesses expand, the operational needs like multiple
payment gateways, methods, and other middleware for smoother payment processing
are inevitable. But this also causes revenue leakage in the form of excess payment
gateway processing fees (some businesses lose millions to such fees), payment
failures, collection delays, etc.
02
 The SaaS Finance Ops Maturity
Model
The first step to plugging the leaks is automate the repetitive tasks that is corroding
the finance teamʼs time and mindspace. The tasks should be automated in a way that
helps a business evolve seamlessly and implement the following changes:
This framework will be Enable data flow between functions when implementing process changes.
laying out the 4 stages of Serve an upmarket (High ACV) or a mid/downmarket (Low ACV) audience when
evolution in SaaS finance testing or implementing business model changes.
automation. This can be Comply with privacy, taxation, and accounting regulation changes when
used as a thought- expanding into EU or from EU to other countries.
structure for a business to
lay out its financial
workflow.
03
The SaaS Finance Operations Maturity Model prescribes the ideal workflow at each
stage of evolution

04
 Scale: <$100K in ARR Volume: Low

This is the stage where a company is just starting out.

Automation tools are available for low costs (or free) when a
company is at this maturity level. With scaling in mind, this is
the best stage to implement automation and to test out
various tools.

Key Goals:
The Order to Send recurring invoices in the right format 
Invoice stage Calculate accurate geo-based taxes for invoices
Collect online payments
Basic bookkeeping

05
Ideal Workflow for Order to Invoice stage

Recurring invoices that are globally

compliant
Tax automation based on geography
for all invoices
Subscription renewal process

06
Measuring success at the Order to
Invoice stage
At the early stages, before the startup has a full-fledged finance team on board, the top
priority will be to acquire as many customers as possible, and more importantly to improve
their activation rate. And from a finance operations perspective, this would translate to
Revenue Booked.

North-star metrics for the Finance Operations team: MRR/ARR booked

North-star metrics for the company: Signup to activation rate,

Daily Active Users (DAU)

07
 Scale: <$1M in ARR Volume: Moderate-low

This is the stage where the volume and/or the value of

transactions are increasing. SaaS businesses at this stage
increase their offerings in terms of more plans and addons
with different pricing. Managing upgrades, downgrades,
refunds, cancellations, and prorations can get complex when
done manually, especially at scale. The need for a checkout
flow that makes upselling easier also becomes more evident.

The Order to Key Goals:

Cash stage Manage subscription lifecycle 
Identify and capture upselling opportunities
Manage billing logic for different plans and addons
Process refunds by issuing credit notes

08
Ideal Workflow for the Order to Cash stage

An automated workflow for upgrades

and downgrades
Process refunds in case of cancellations
Issue credit notes and promotional
credits
Proration for annual subscriptions in all
these cases.

09
Measuring success at the Order to
cash stage
By this stage, the business would have achieved a consistent revenue flow, and booking
revenue will no longer be a pressing concern. The focus shifts towards realizing revenue
from the existing user base, where the FinOps team will have to tackle questions like,

Are customers paying on time? 

Are payments coming through? 
What happens to delinquent payments? 
How are the accounts receivables aging?
How to minimize churn?
North-star metrics for the Finance Operations team: AR Aging, Cashflow
North-star metrics for the company: MRR Churn

10
 Scale: <$10M in ARR Volume: Moderate-high

A company at this scale will be going through rapid

expansion across new geographies and widening their
customer base. Selling to more countries requires adding
more payment gateways and methods, and supporting more
currencies.The role of finance ops at this stage includes
multi-currency support, smart payment routing based on
geography to avoid heavy transaction fees, and tax
compliance across all geographies.

The Order to
Key Goals:
Revenue stage Expand into new geographies
Ensure tax and payment compliance in all geographies
Offer multi-currency support
Smart route payments to avoid heavy transaction fees

11
Ideal Workflow for the Order to Revenue stage

Help plug revenue leakage to the

maximum extent by using smart
gateway routing to avoid heavy
transaction costs.
Help recover leaked revenue by
having a smart revenue and failed
payment recovery logic in place

12
Measuring success at the Order to
revenue stage
User expansion is key at this point. Itʼs about going the extra mile to capture more
customers. More effort is expended to increase the MRR from the existing user base, to
acquire new customers, and to minimize churn in relation to each other.

North-star metrics for the Finance Operations team: Relationship metrics and
reports like Retention cohorts, Net Dollar Expansion, Quick Ratios, Churn
Breakdown Charts

North-star metrics for the company: Expansion MRR, New MRR, Churn

13
 Scale: $10M+ in ARR Volume: High
Finance ops’ role at this stage starts right from when a quote
is created for a lead and continues until that quote gets
converted into an invoice and gets recorded in the books.At
this stage, revenue leakage due to workflow and process
inefficiencies becomes a straitjacket for growth. Not having a
sophisticated and smart finance ops workflow at this point
can massively stunt an organization’s growth. To identify and
plug those leaks, end-to-end visibility of all workflows across
all teams is required.
The Lead to
Ledger stage Key Goals:
End to end visibility from quotes to revenue recognition
Minimize revenue leakage
Financial analysis and revenue forecasting
Attribute revenue to leads

11
Ideal Workflow for Lead to Ledger stage

A robust subscription billing and

management platform that
integrates right from the top with
a CRM to create proforma
invoices, till the bottom with an
enterprise-grade accounting
software to create compliant
revenue reports. 
Distinct parent-child hierarchy
mapping and consolidated
reporting to help with accurate
forecasts
12
Measuring success at the Lead to
Ledger stage
This goal at this stage for any business would be optimization. Priorities shift to optimizing
workflows, minimizing revenue leakage, identifying better forecasting metrics, and
devising better attribution models. Some of the questions that the FinOps team will have to
deal with are:
Which marketing source is performing the best? 
How are the discount campaigns performing? 
How to reduce the gap between the revenue forecast and the actual revenue? 
How to identify revenue leakage across functions and plug them?
North-star metrics for the Finance Operations team: Reducing the gap between
revenue forecast and actual revenue.
North-star metrics for the company: Leakage due to revenue inefficiencies
13
Conclusion
Scaling processes efficiently is a challenge that every growing team
faces, not once but at every stage of their SaaS evolution. This
challenge is more pronounced for a finance team as they donʼt have a
lot of leeway in changing the existing processes and stack. 
Opting for a subscription management platform that integrates with
the organizationʼs payment gateways, and the toolkit of the core
business functions like CRM, accounting platform, etc. is crucial.
With this maturity model, finance ops teams will be able to preempt
the requirements for their next stage of SaaS evolution and be
equipped for efficiency.

14
About Chargebee
Chargebee integrates seamlessly with techstack of your core
business functions and helps you automate global tax management
and compliance, recurring billing for multiple scenarios, pricing model
experiments, and every little-big function in your finance workflow. 

Understand how Chargebee can help Streamline your Finance

Operations by scheduling a demo with us today.