There is no business like a SaaS business. With the rise of SaaS business came new metrics and new rules to assess, monitor, and steer SaaS business performance. Traditional business models looked at product or service profitability as a one-off transaction, but in SaaS, we need to monitor CLV along with the whole range of recurring transactions. The cash flow is not based on sales of products, but on MRR. ARR became the leading indicator of longer-term revenue performance.
Saas Business Is Driven by Different Metrics
When business models evolve, the systems processing it should also evolve. Except for they typically don’t. That’s why we see a lot of SaaS CFOs resort to BI solutions or even Excel to take data from old-fashioned ERP and billing solutions to create those critical reports that tell where they are heading. Clumsy, time-consuming, and error-prone, but the next best way since the data is stuck and hidden in existing solutions.
Why, would you ask, is it so difficult to get the right data from the systems? The short answer is the contracts. For SaaS billing, it is crucial to leverage fine-grained contract data as all billing events are derived from it.
Older billing solutions or mainstream ERPs simply do not have that level of detail. CLV and in-contract customer profitability become cumbersome without that kind of data. Contracts hold the key to your cash flow predictability, including your MRR. ARR and churn, but your system might not be up for the task.
Wouldn’t it be nice if you could see profitability per contract at any point in time across all your SaaS contracts? Or better: wouldn’t that be an absolute necessity?
Today, most billing and contract management solutions are split, which makes it harder to have them talk to each other. And with split tasks come split responsibilities. An integrated contract billing solution is the core to enrich SaaS data. Once you have all data elements available, reporting, monitoring, and managing them is simply easy.
Most SaaS companies start small. Looking for a SaaS billing solution might not be the first item on the list. Like many SaaS companies, you might not even have a billing system capable to offer any usage-based metrics. A modern SaaS billing platform can process the usage data and scale against flexible contract and billing rules and produce accurate, detailed invoices. On top of that, it gathers the data that gives you the insights to optimize your pricing and drive growth. You should look for a scalable billing solution that supports your SaaS business’ growth.
If you feel your billing needs will outgrow your current recurring revenue billing solution, or if you are just curious to learn how Good Sign does things differently, feel free to take us to the test! We will gladly take on your challenge and prove to you it can be done, and that the new world lies beyond just subscriptions.
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