Two main jobs for Finance in B2B SaaS
When I joined Lokalise out of the finance world (M&A and VC) it was obvious that I should own finance. At the time there were 30 of us with a quickly growing ARR and it really meant looking after everything that is not GTM and not Product – startup life. Today there are 120 of us and we've recruited specialists in many of the areas I formerly looked after. As I hit a couple milestones with Lokalise I took a pause to articulate what I see the role of Finance here and in other B2B SaaS companies.
Finance sits between strategic and operational decisions. The people in strategic and operational leadership roles are often the same in growing companies, so Finance has to work with all of them to enable the best possible decision making on many levels of abstraction. Essentially, the Finance team has two jobs:
- Operationalizing investment decisions: ?? => ??
- Analyzing KPIs to drive investment ROI: ?? => ??
Operationalizing investment decisions
Most smart leaders act like investment managers allocating scarce resources (time, money, people) to the best possible bets. Deploying these bets is often complex and carries a lot of execution risk. An investment decision might be that we should build out an account management team based on some hypothesis agreed upon by the strategic leadership. This is where the Finance team works with Sales leadership to determine how much resources to allocate and when. Eventually cash is deployed, spend is controlled and booked. So the Finance team works in near-constant back and forth with various operational leaders to invest resources in a way that works for the whole company. Surprisingly (to me) very often I end up not pushing for reduction of spend, but rather a more aggressive investment into areas that deliver well.
Analyzing KPIs to drive investment ROI
When investments are deployed we have to go back and measure what happened – give money, get KPIs. Smart leaders tend to measure diligently anyway, but it's very important to figure out what really moves the needle on a tactical and strategic level. This can be harder for operational leaders because they often lack comprehensive information from other departments and costs. So Finance goes to all teams to pick up the right KPIs for improved decision making – e.g. finding and delivering enough data with context to decide whether the new account management team is delivering good ROI. A secondary, but often very important task is about working with operational leaders to make sure focus is maintained and investments don't slip into adjacencies over time.
