Make no mistake: there is a long list of financial metrics to take into consideration as a SaaS CFO.
Focusing on the right metrics however, helps you to gain deep insights into your business performance, which, in turn, assists with the strategic direction you need to take to generate more revenue.
But which metrics deserve your attention? This article will shed light on the five most important metrics for real revenue insights.
The metrics that matter
All metrics have a role in highlighting the success and growth of your business. Nevertheless, we have highlighted five SaaS financial metrics you cannot afford to overlook, with a short definition. These are:
- Monthly recurring revenue (MRR): Both the MMR and the annual equivalent (ARR) should be measured by every SaaS business. This is useful to identify the MRR average per customer, as well as your recognised MRR.
- Cash flow: MRR misses out on one particular aspect: it doesn’t paint a picture of your company’s cash health. Thankfully, cash flow helps save the day. By regularly measuring cash flow and burn rate, you know your true cash health and the runway total available.
- Churn: Every SaaS business would love a 100% renewal rate. Yet, this isn’t realistic. Churn is an inevitable situation, something you can never let get out of hand. By tracking subscription churn closely, you can quickly identify if there’s an issue, such as pricing or customer dissatisfaction, causing it to rise beyond expectations. A typical "good" churn rate for SaaS companies is between 3%-5%, and a good churn rate is considered 3% or less.
- Customer acquisition cost (CAC): As the name implies, this metric outlines how much it costs your business to acquire new customers. The quicker the CAC payback period, the more valuable it will be for your company.
- Customer lifetime value (CLV): The CLV demonstrates how much money customers spend with your company on average during the time the stay with you as a customer. This helps in determining the profitability of each customer over time.
The best of both worlds
Billforward is the best developer-focused billing platform on the market. Our native integration with ChartMogul allows you to accurately measure all of the above with ease, for real-time revenue insights - as soon as you start using Billforward.
If you have a Billforward account, all data from this account can be made available and then analysed in ChartMogul. Not only does this keep your all-important metrics in-sync, it allows you to easily identify the insights you need to steer your business.
Using a dependable system like this is beneficial for several reasons. Most importantly, it saves you the time and effort required to tabulate metrics manually. Along with automatic calculations, you also gain deeper insights into customer usage and learn about the best upsell opportunities. ChartMogul is user-friendly too, allowing you to easily produce clear reports on revenue that management will love (little do they know it didn’t take you nearly as long to produce as your outdated, manual reports).
Moving (Bill)forward with your metrics
Knowing your metrics and having the right platform has two main advantages.
Firstly, it makes your job a lot easier.
Secondly, it provides benefits for not only your finance team, but your business as a whole.
Thanks to our integration with ChartMogul, your billing platform can help you streamline revenue operations in more ways than one. Monitor the metrics and stay ahead of the curve, and, most importantly, ensure your SaaS company stays on track with its growth targets.
Visit our page to find out more about a billing system that works with your finance team.