There are several metrics that are important for a finance manager in a SaaS (Software as a Service) company to track:
- Monthly Recurring Revenue (MRR): This is a key metric for SaaS companies as it represents the predictable revenue stream that the company can expect on a monthly basis.
- Customer Acquisition Cost (CAC): This metric measures the cost of acquiring a new customer, including marketing and sales expenses. It is important to track this metric to ensure that the company is acquiring customers in a cost-effective manner.
- Lifetime Value (LTV): This metric represents the total value of a customer to the company over the course of their relationship. It is important for a SaaS company to have a high LTV as it indicates that the company is providing value to its customers over a long period of time.
- Churn Rate: This metric measures the percentage of customers that cancel their subscription or do not renew it. It is important for a SaaS company to have a low churn rate as it indicates that the company is retaining its customers effectively.
- Gross Margins: This is a measure of the profitability of the company and is calculated as revenue minus the cost of goods sold, divided by revenue. It is important for a SaaS company to have high gross margins as it indicates that the company is generating a significant amount of profit from its sales.
- Net Promoter Score (NPS): This metric measures the likelihood that a customer will recommend the company’s products or services to others. It is important for a SaaS company to have a high NPS as it indicates that the company is providing a high level of customer satisfaction.
- Days Sales Outstanding (DSO) is a financial metric that measures the average number of days that it takes a company to collect payment from its customers after a sale has been made. It is calculated by dividing the total amount of accounts receivable by the total sales for the period, then multiplying that number by the number of days in the period.