By David Appel, Sage Intacct
While the COVID-19 crisis continues to evolve, many SaaS and subscription finance leaders are looking ahead to the recovery phase and wondering what their peers are doing. During the virtual Modern SaaS Finance Summit, CFOs and investors shared six steps you can take to put yourself and your company in a position to know where you stand, anticipate and plan for volatility, and communicate your plan to your Board. Here are those key takeaways from the Summit:
Step 1. Know Where You Stand on Cash and Tackle Churn
Going forward, companies will continue to stay on top of their churn, cost structure, and capital consumption. Boards will be focused on cash flow management as well, so make sure you can answer these key questions:
- How much runway of cash do you have?
- What revenues can you depend upon, either customer by customer, or product by product, or cohort by cohort, depending on your billing model?
- How are you working with customers to reduce churn?
When you evaluate your revenues and customers’ ability to pay, you need the right tools to accurately model the direct impacts on your cash positions. You also need the ability to quickly change your assumptions to adjust to the market. With multiple models at hand, you can be proactive with customers to reduce churn.