By bringing marketing, operations, accounting, and other core functions onto a single, integrated platform, high-growth SaaS companies can accelerate their sales cycles, get quotes out faster, and close more deals. We talked with PwC collaborator Jeff Mandler about how to achieve these benefits

As more organizations use software delivered in an as-a-service model to manage critical business functions, the companies that develop and provide those SaaS systems need robust, unified platforms to fulfill customer demand, attract outside investment, and go public.

Because SaaS solutions are served up on a subscription basis, many providers need to comply with the ASC 606 revenue recognition standard. And because they manage high volumes of repeat customers, they should have effective management of the lead-to-cash cycle, a process that involves shepherding a deal from initiation to collecting and processing a customer's payment — the core of a subscription-based company’s success.

For SaaS companies seeking outside investment or to go public, robust accounting and reporting capabilities can be critical.

Yet a surprising number of these firms still rely on a combination of manual processes, spreadsheets, and basic enterprise resource planning (ERP) platforms. Many also use separate customer relationship management (CRM) applications and basic accounting software, plus subscription billing solutions.

“Some SaaS companies suffer from disparate systems that can slow operations — they spend a lot of time transferring data from one system to the next, dealing with high error rates, and struggle to obtain a clear picture of performance,” said Jeffrey Mandler, principal at PwC, a NetSuite Alliance Collaborator.

Take the all-important lead-to-cash cycle. If marketing logs a lead in a system that doesn’t integrate with the CRM system that the sales team uses, for example, there can be a breakdown in communication, and the company might even miss out on a sale as a result.

“Many SaaS companies have high-growth agendas,” said Mandler. “They have sales teams out there selling as best as they can, but they’re often held back by the siloed nature of their operations as it relates to lead-to-cash.”

Helping Turn Leads Into Cash

A solid lead-to-cash plan gets sales, marketing, operations, accounting, and other teams working from the same playbook. By bringing these core functions onto a single platform, SaaS companies can help accelerate the sales cycle, get quotes out faster, and close more deals.

Its long experience working with SaaS companies helps PwC understand the intricacies of their lead-to-cash processes and the associated challenges.

“Given that the lead-to-cash cycle helps drive revenue growth for SaaS companies, getting the architecture, process, and master data management governance in place can be critical,” said Mandler. “Unfortunately, it can also be a key struggle.”

For example, a company that’s involved with a divestiture or an acquisition may have to make quick changes to its existing front- and back-office systems. Knowing this, PwC has bundled a pre-built model system, technical tech-enabled solutions, and industry knowledge into an automated lead-to-cash process and data flow that includes complex revenue recognition management.

Software, SaaS, and technology industry solutions in conjunction with our services can combine both the Agile and SuiteSuccess methodologies to help get SaaS companies up on NetSuite ERP quickly. Agile can help manage projects by breaking them up into several phases, while SuiteSuccess can leverage industry-leading and industry-specific practices to help accelerate NetSuite ROI and reduce overall business risk during the implementation process.

Automate for Speed

Once in place, the solution can help feed new leads into a third-party configure, price, quote (CPQ) system to handle configuration, pricing, and quoting. NetSuite then can take over and help handle order management, billing, and advanced revenue management (ARM) for proper revenue recognition.

By automating the flow of data from the front office, through a third-party customer relationship management (CRM) system and continuing revenue recognition and financial reporting, the solution can help significantly reduce the need for manual work, spreadsheets, and disconnected technology solutions. The unified system can allow companies to close deals faster, which can be a key attractor for outside investors and private equity firms.

With a typical implementation time of six to nine months, our solution can help high-growth SaaS companies:

  • Automate the flow of data from lead generation through to cash acceptance, revenue recognition, and financial reporting.
  • Significantly reduce the amount of manual effort spent on key financial processes like order-to-cash (O2C), record-to-report (R2R), and procure-to-pay (P2P).
  • Meet financial and management reporting requirements in a timely manner using system-generated reports and an improved chart of accounts (COA).
  • Significantly increase data quality and the alignment between systems via software integrations.
  • Obtain timely and accurate system-generated customer billing across a wide range of billing models.
  • Connect subscriptions, transactions, and projects to the billing engine and, ultimately, to financials.
  • Better upsell, downsell, cancel, and/or refund contracts as needed.
  • Standardize processes in line with industry-leading practices and our preconfigured solution environment to reduce manual effort and implementation time.
  • Get onto a system that supports the initial public offering (IPO) trajectory, Sarbanes-Oxley Act (SOX) compliance and many other requirements that high-growth firms should address as they expand and go public.

With their back-office processes aligned and automated with our solution, SaaS companies can significantly accelerate their month-end close process and reporting cycles. They can also better avoid data integrity issues and get a clearer and more accurate picture of their overall performance and financial health.

Solving Problems Now vs. Later

One mistake that Mandler often sees is SaaS companies waiting too long to move to a unified lead-to-cash solution. For example, many wait for a transitional service agreement, merger transaction, or IPO deadline before assessing their current systems and making the move to a more scalable technology foundation.

“If your company is in high-growth mode, the time to get the foundation in place is now, rather than starting later and playing catch-up,” Mandler said. “You don’t want to try to accelerate this type of program to meet a deadline. By that time, the risk and strain on your people will likely be much higher. The longer you wait, the harder it can be to solve these problems.”

Reach out toPwC’s NetSuite practice to learn more.