As businesses prepare for a looming recession, there is mounting pressure on CFOs to ensure financial stability. To maximize cash flow during economic turbulence, CFOs need to rethink value measurement and focus on improving operational efficiency with limited resources to steer the business ahead. 

Finance leaders who champion change and capitalize on the benefits of digital transformation will be ideally positioned to win against the ones who don’t.  As a  CFO, you need to be at the forefront of building that agility across the organization and driving change. “CFOs need to be able to execute with precision in times of rapid change. CFOs play a critical role in driving revenue visibility and predictability, therefore a key influencer in a company’s go-to-market strategy,” says Joyce Mackenzie Liu, founder, Pegafund, which provides strategic CFO services to B2B software start-ups. 

Read on to know how you can ensure sustainable growth for your business. 

Managing the Messy Middle

Despite the macroeconomic shifts, businesses can still increase productivity by focusing on re-inventing and experimenting with new initiatives. During times of hypergrowth, it can be difficult to step back and think about efficiency improvements, but a recession definitely provides the opportunity to do so. CFOs can leverage the downturn to reimagine their organizations and double down on automation to streamline revenue management operations and invest in assets and technology that maximize efficiency and profitability.  Take the example of Rented, a leading provider of Revenue Management as a Service (RMS) for property managers of vacation rentals. At a time when the vacation rental industry faced significant challenges during the COVID-19 lockdowns, Karen Fleck, the CFO, and her team were able to retain 80% of their customers by using Chargebee to implement a customized discounting strategy.

Similarly, this period of economic uncertainty may be a good time to consider experimenting with pricing. According to the OpenView 2022 SaaS Benchmarks Report, 61% of  SaaS companies updated their pricing to see an increase of 27% in ARR.  This could also be a good time to offer your subscribers a value-based pricing model where the amount that users are willing to pay for a product is based on their perception of its value. At a time when customers are tightening their purse strings, implementing usage-based pricing can help retain and strengthen relationships with current customers as well as acquiring new customers. 

Steering the Ship

In challenging times, enabling speed with direction is what will set up the company for long-term success. CFOs now have the vantage point to provide that direction. “By leveraging real-time data from multiple sources, both internal and external, CFOs are uniquely positioned to help businesses understand and predict the outcome and trade-offs for any strategic decision that can impact growth under multiple scenarios,” says Narasimha Kini, Head of Finance, EXL which specializes in operations management and analytics. CFOs now have the ability to monitor the impact of these growth initiatives in real-time and can course-correct at any time, thereby playing a crucial role in setting the future direction of the business. So, CFOs have evolved from their traditional role which focused more on accounting, tax, financial reporting, internal controls, budgeting, and risk management to becoming Chief Growth Officers playing an integral role in strategic initiatives, be it capital allocation, or investment in technology that drive operational efficiency. For instance, revenue recognition can be a complex process for subscription businesses. So automating revenue recognition helps you eliminate complexities, automatically recognize revenue upon fulfillment, accurately forecast revenue, and stay compliant with global standards like ASC 606 and IFRS. With the help of Chargebee RevRec, we’ve been able to grow and save money. The automation of processes itself easily saves us an operating cost of over $150,000 annually. We foresee our yearly audits taking days, not weeks, despite our complex revenue streams, thanks to Chargebee RevRec.” says Jennifer Dills, CFO, Drake Software

Preparing for challenging times

To future-proof their business, CFOs need to focus on improving org-wide operational efficiency which requires the pivot to digital transformation. A recent study from Everest Group found that 70% of CFOs agreed that implementing digital technologies to improve efficiency, effectiveness, and stakeholder experiences is a top priority. As CFOs you need to create adaptable business models that can react quickly to changing market conditions and leverage every opportunity that the change may bring.  So, you need to invest in technology that adapts and scales with your business. As you grow, your finance workflows become more complicated. Before you know it, your team juggles accounting, financial planning, managing the revenue cycle, ensuring tax compliance, and meeting regulatory requirements. You need an adaptive revenue infrastructure that helps automate many effort-intensive and repetitive tasks. Automation also goes a long way in eliminating inconsistencies and plugging revenue leaks.  But most importantly, automation saves you precious time, so you can focus more on driving strategic initiatives such as increasing revenue, expanding into new markets, experimenting with pricing, and improving profitability.   

For instance, in SaaS, geographical expansion is a no-brainer because there are no limitations on where you can sell your product. But international expansion means you have to worry about regulatory requirements, numerous payment methods, and tax compliance. Your tech stack should enable you to do so without having to worry about regulatory requirements like tax and payment compliance. Freshworks partnered with Chargebee to scale across multiple products, geographies, and industries. They were able to offer multiple payment gateways, localize experiences, and streamline their product catalog, which helped them bundle products together. Having one view across products and customers helped the company scale from 500 to 50,000 customers across 120 countries.

Closing notes

As CFOs, you are also looking to align capital with growth opportunities with the highest ROI in the long term.So you need a single source of truth for data that helps you understand all the business components and how you can optimize them. You need  those critical insights to see what drives incremental results for the company and can be scaled up.“You need to ensure you have complete revenue visibility with robust integrations with your CRM, customer support, billing and invoicing, and expense management systems. This way, your customer and employee lifecycle is integrated across the business and enables you to be agile in your go-to-market strategy,” says Pegafund’s Joyce. 

In times of uncertainty, data becomes critical for speed of execution and business performance. As the CFO, you are the best person to lead an enterprise-wide alignment and transformation. You can leverage data and technology to become more efficient and derive insights to identify opportunities to fuel growth or even adapt to new business models.  This will help in setting the future direction of the business, influencing operating decisions, and messaging the market and investors

“In today’s hyper-competitive market, if we are not equipped with the right tools, we are lost. I would prefer a system like Chargebee any day as it helps with everything from invoicing and taxes to payment collection and reconciliation,” says Edouard Celier, CFO, Sendinblue

Are you ready to check out how Chargebee, an adaptive revenue management platform, can help you drive sustainable growth for your business? Chargebee powers your entire revenue lifecycle — from checkout to cash, revenue recognition, customer retention, and more — from one place and automates key processes with confidence.  If you’d like to automate your recurring revenue lifecycle, get in touch with us, and we’ll take it forward from there.