SaaS firms need to inevitably change their finance and accounting while evolving from a startup stage to reaching their milestones. But, adding a SaaS finance and accounting expertise raises the question: Whom do you need? An accountant, a controller, or a CFO?.

SaaS finance and accounting include three primary roles according to their seniority levels: SaaS accountants, controllers, and CFOs. You need to identify whom to hire in your current situation.

When to hire SaaS finance and accounting expertise?

When your business is outgrowing its current accounting capabilities, you need to look for a SaaS accounting firm uk to outsource your finance and accounting tasks or hire senior finance officers.

For example, You may be spending time reviewing and correcting your financial reports every month, or your books are not closing timely. You may find inconsistency in measuring and interpreting KPIs or be unable to get detailed insights on business issues and opportunities.

There can be several times when you feel the need for an expert. Especially when your stakeholders are asking you financial questions, and you cannot give a correct answer, you aren’t confident to discuss your latest KPIs to draw firm conclusions, or growing funds, and others.

We all have heard about Maslow’s hierarchy of needs. It is pretty similar to our hierarchy of financial needs, but it deals with company needs and not individuals’ developmental needs.

Record-keeping comes at the base of the financial hierarchy, next is reporting. We have planning and forecasting on the third level, and the top-level consists of strategy setting. Every individual responsible for managing your company’s finance must work hand in hand to maximise the business growth.

Who do you need: Accountant vs Controller vs CFO?

SaaS Accountant

A startup in its initial years needs to focus primarily on compliance, recording transactions, filing your tax return, billing and invoicing, and a few day-to-day accounting activities. An accountant collects financial data from bookkeepers and performs budgeting, Cost Allocation analysis, preparation of financial statements, and forecasting.

However, a SaaS accountant does more than a traditional accountant. They help you in:

• Understanding the revenue recognition process.
• Preparing correct financial statements complying with the government regulations, especially for a subscription business.
• Reading different clients’ contracts and recording accurate financials.
• Offering expertise in handling subscription billing tools.
• Mastering the logic of renewals, churns, and revenue expansion and contraction.

They have experience working for several SaaS firms and can help you cross the first two levels of the financial hierarchy of needs.

SaaS controller

When you move one step up the financial hierarchy, you must look for an expert in planning and forecasting. Most businesses fail due to insufficient planning and forecasting, especially for companies in a dynamic environment where consumers and business demands keep changing.

Who is a controller? A senior-level financial executive is responsible for managing the accounting department. They deal with accounting functions, budget creation, and the timely preparation of financial reports. Controllers check all the essential financial statements and hand them to the stakeholders.

Working with a controller means you are looking one step forward and ready to take things into your hand. When your accounting books start closing monthly or quarterly, SaaS companies will benefit from a controller rather than an accountant.

A financial controller provides expert accounting services that include:

• Supervising the accounting team.
• Checking the accuracy of your financial reports.
• Establishing, monitoring and enforcing policies and procedures.
• Verifying whether your accounting process complies with federal, state and local legal requirements.
• Fixing the accounting period close process and report delivery
• Monitoring internal controls to check errors, fraud and security breaches.
• Supporting your accountant during tax and audit.
• Accounting for international subscriptions.
• Owning the accounting system and adjusting wherever required.
• Maintaining reports across multiple entities.
• Advising owners and executives on market trends and best financial practices
• Selecting the best financial software and scalable accounting technologies.

SaaS CFO

At the top of the financial hierarchy, there is strategic planning. That is where you need a SaaS CFO responsible for providing broader financial functions. At this level, businesses usually think of long-term goals, fundraising, managing stakeholders, increasing conversions and revenue, reducing costs and increasing profits, International expansions, mergers and acquisition decisions, and business models. A CFO can help you deal with all these requirements.

Who is a CFO? A CFO, known as the Chief Financial Officer, is a senior executive responsible for managing the financial actions of a SaaS company. One may confuse between a controller and a CFO. However, the role of a controller ends at ensuring accurate financial reports, whereas CFO is involved in fundraising and finance strategy.

A SaaS company may need a CFO for the following services:

• Overview of the financial strategy and direction of your business.
• Supervising your finance team with guidance and oversight.
• Providing detailed insights and feedback on your company’s performance.
• Supporting sales growth with sufficient budget allocation on sales-driving activities.
• Ensuring the profitability of the company.
• Strategising capitalisation plans to minimise the capital requirements of a business.
• Focusing on Market trends, Financial forecast and the competitive landscape to identify opportunities and threats.
• Being the face of the company to outside parties.
• Guiding the executive financial team in creating their P & L reports and KPIs.
• Managing the board, investors and lenders during business growth stages.
• Developing investment strategies to minimise dilution of ownership.

The future CFOs will bring in-depth knowledge in finance and collaborate with the CEO and the sales and marketing teams to translate financial data into real-world strategies that can overcome any challenges.

When to step to the next level of the hierarchy?

In the initial years of your business, you make little revenue, and report keeping and reporting tasks can be sufficient. But as a company starts growing, managing your finances becomes difficult, and you need to move up the pyramid.

As you start taking on new clients, you need to change your business structure. Hiring a controller or CFO can benefit your table to cope with the bigger and more complex business scenarios.

In contrast, if your business performance starts falling, you need to relook at your business model. It too requires expert knowledge to identify your mistakes and future opportunities, where a controller and a CFO can be helpful. You can identify the business ideas to focus on and take your business to success levels with sufficient information and data.

How to hire a financial expert?

Once you understand your company’s needs, you can start looking to step up your finance and accounting capabilities. The next question is should you hire a full-time or part-time connection expert?

Depending on the size and budget of your company, you can decide whether to bring in an in-house expert or look into outsourcing firms.

Outsourcing service is a flexible and cost-effective way to increase your F & A capabilities and exposes you to a professional team of accountants, controllers, and CFOs. Therefore, the service provider will understand your requirements and provide professionals accordingly.

You can also go through the resume of different candidates and arrange a face-to-face interview to make sure you are hiring the right candidate.

Wrapping up

In its initial years, A SaaS company can work with bookkeepers and accountants. But, when the complexity increases or you want to scale up your business, it is essential to hire a controller and a CFO. A controller is responsible for managing your accounting operations with accuracy and timeliness, and a CFO concentrates on strategic planning for business growth.

It is essential to understand where you are standing in the hierarchy of financial needs and then hire a financial expert who can fulfil your present needs and help you take one step up the hierarchy.