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    10 / 26 / 2020

    Ascent Conference: Finance & Accounting Playbook

    SaaS FoundersA few weeks ago, I had the pleasure of participating in this year’s Ascent Conference, a staple of the startup, SaaS, and venture capital communities in the Greater NYC area. Because of COVID, the event was held virtually. I gave a keynote presentation on “How to Extend Your Runway with a Finance and Accounting Playbook.” As the founder and CEO of Baker Tilly, a services and technology company delivering the Future of Finance and Accounting to nearly 1,000 organizations throughout the country, my team and I have firsthand experience implementing the processes, controls, and technology needed to optimize financial resources for SaaS companies at variety of growth stages. As a result of this experience, we’ve developed a Finance and Accounting Playbook that I shared during the keynote. The effects of COVID-19 for the past few months have only reinforced the need for this kind of planning.

    You can watch my keynote on-demand here: https://www.ascentconf.com/agenda?agendaPath=session/344030

    In addition to the keynote, I had the opportunity to take the same topic and cover it as a discussion in two smaller workshop and round table formats, where Zoom attendees could ask questions, provide their own perspective, and discuss the topic amongst themselves. I thought I’d share some takeaways from these fascinating discussions.

    Workshops & Round Table Founders

    Proactive PlanningWhile the discussions showed a wide array of attitudes toward finance and accounting and experience with how that function impacts the growth of a business, I found that attendees of these round table and workshop sessions fell into roughly three high-level categories:

    1. Serial founders who tended to sell or leave businesses before they grew past around $5M in revenue
    2. Those that had grown businesses longer and seen them grow past $5M in revenue
    3. Those who fundamentally understand the benefits of strong financial analysis, perhaps because that’s their main function

    Those in the first category are more product-minded and seemed to see finance and accounting as an obstacle or even a necessary evil. They tended to see QuickBooks as the obvious technology on which to run a startup SaaS company’s finances and hadn’t put much thought or credence into building a more sophisticated tech stack for the finance function. They had not considered the concept of building a playbook as an important part of growing a SaaS business.

    The second category of SaaS leaders had more experience with the challenges of running finance and accounting at companies that grow beyond $5M or so in revenue. Many of these folks see finance and accounting as an obstacle or necessary evil and not necessarily as a strategic asset. There were those, however, that pointed out how it is likely to be one or the other. When run properly and when it can provide real-time insight and KPIs about the business, it can be a strategic asset. But if it is set up poorly and run on wrong-sized technology, it is a stumbling block for growth.

    The third category included Financial Planning & Analysis professionals and those with experience pulling insights from the accounting system as the single source of truth. These participants had seen the metrics that SaaS businesses need to make the right strategic decisions – Customer Acquisition Cost (CAC), Customer Lifetime Value (CLTV), LTV:CAC Ratio, Churn, Uplift, Downgrade, and many more. They saw the value in having a playbook.

    Key Questions & Takeaways

    One of the key questions that came from participants was around when a company should consider switching from QuickBooks or Xero to a more sophisticated accounting system. In my view, if you’re at or below $10M in revenue and you can still get close to real-time KPIs from the system, probably with some work in Excel, without burning a lot of hours, that’s great. QuickBooks or Xero are still working for you. But if you can’t and you have the need for real-time dashboards, the ability to drill down into the data, and you can’t do that without a lot of manual effort, then it’s time to switch.

    A second key question was about when a company should consider outsourcing versus insourcing finance and accounting processes. My perspective is that when you start out, you should be outsourcing everything that isn’t core to your business, including all of finance and accounting. Leave it up to the experts by finding an experienced partner. So, the question is more about what you should insource and when? I believe companies don’t ever have to insource the finance operations processes – AP, AR, Month-End Close, Cash Management – all that transactional work can be outsourced.

    But, when you reach certain revenue levels (or number of customers, contracts, or transactions), consider insourcing the Financial Planning & Analysis. This may happen sooner for B2C customers than B2B because of the higher volume they may see earlier on in the revenue growth. FP&A is much closer to the core of your business than running finance operations. By outsourcing the day to day transactional processing, it can allow an internal CFO or other finance leader to become more strategic, challenging the business and influencing the company’s decision-making.

    The next question may then be: when do you decide to outsource even the FP&A function to a provider that has even more experience and expertise? Stay tuned for more on that.


    Marcus Wagner

    Marcus is the founder and CEO of AcctTwo, a services and technology company delivering the Future of Finance and Accounting to nearly 1,000 organizations throughout the country. Marcus and his team have firsthand experience implementing the processes, controls, and technology needed to optimize financial resources, no...

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