David Appel 0:02
Hello, everyone is excited to have you in this session, very appreciative and humbled to be asked to speak here at this presentation for radiance, and everyone’s learning there hope you’re having a great set of sessions in the series already. My name is David Apple, I’m head of the SAS vertical, here at Sage Intacct, we’re the world’s largest provider of combined subscription billing, and financial systems to the office of the CFO, and we greatly appreciate the partnership with HighRadius. My presentations on the five key decisions you need to make while building the finance tech stack. Particularly for all growing companies or certainly mid-market organizations. I want to start with its about really two things that you need to build and create,
David Appel 0:43
which is having a frictionless experience, and then getting into reporting to guide decisions and investors, and I want to start with the story here. For those of you who may or may not have heard this before about the French cathedral builder in the 14th century, medieval France, there was a cathedral builder hustling down the dirt road, that person passed three people stacking bricks is that the first one? What are you doing person said, Oh, I’m stacking bricks. So okay, passes. The second one, what are you doing? The person says, Oh, I’m stacking bricks to build a wall. And the cathedral builder says, OK, passes. The third one says What are you doing? While I’m stacking bricks to build a wall in order to learn how to build a cathedral one day, you fast forward to the future, the first person’s dead second person is barely scraping by. Does anybody want to guess what the third person’s doing?
David Appel 1:30
building cathedrals. And so I liken it to what we do with what we provide and what you do every day with trying to run a great business. You need to automate processes in order to get insights into what’s happening. Accounts receivable, but also accounts payable all the other core accounting processes, but it’s only stacking the bricks. If you’ve done that, right, you get a good data set to understand what’s happening in the business. And you’re able to then get further insights to guide what’s happening, critical, that’s only building the wall, when you’ve automated those processes, got great insights, but then can look forwards and backward into the heart of what the business is you can build a shared consciousness amongst the staff and the executive team that allows you to truly prosecute the mission that the company has, which is bringing value for your customers and your customer’s customer. You’ve been all the more insightful and thoughtful on that. And that’s how you build cathedrals. And so what I’m trying to do every day in my team, is to help our clients build cathedrals, I hope that’s what these five insights allow you to do. Coming out of today’s session. So what do I and we hope you learn, how do you create a frictionless experience and excellent reporting? How do you build a checklist for creating a new stack? What’s the reporting need to create? What is the key building invoice to cash scenarios to support? What is in the finance tech stack? So I hope you learn let’s jump into when I start on this slide per second. Now, what do you do as you go through the stages of growth as a company, we’re going to start at the bottom at seed and then we’re going to work our way up. So in seed, you’re looking for product-market fit just churning just get 10 Happy customers to give me some great feedback on the product. Trying to manage the CEO store receipts in a shoebox paying some developers cash is a primary concern and series A trying to prove your revenue model, you can sell what it is that you just created, go to 100% of the reps that you hire 75% Plus when making quota, you start to automate the core cash flow processes around this subscription billing, AP and AR and there’s a lot of metrics you can manage with certainly unit economics is one of them. Then Series B approved you’re in that expansion revenue model that you can get the people who’ve chosen you to begin with to buy from your second and third time and still keep the new client acquisition rate going to 50%. A lot happens to finance here also need to track all the contract amendments upsells and renewals possibly cancellations that are coming in. You’re trying to do all that with all those changes to keep your ASC 606 in the US or IFRS 15 Internationally, the good clients gone. As you do with all that again, volume is going up complexities went up changes going up to trying to get more clarity as to what’s going on. So you can forecast revenue billion in cash to guide the big decisions that the company needs to go through. And then as all this is happening, you’re trying to cut the clothes or understand get that data to the executive team Neff PNA to the board that much faster. A lot of measures here. Classic one similar for customers. When you got to come into a customer. Then that red bar series Sita going to 100 million in gross profit. You broke a lot of glass on this path, but hopefully, you found a good repeatable business model because you want to take
David Appel 4:50
create repeatable, predictable, and profitable models and a lot more FPGA analysis here because you’re trying to figure out how to make it more profitable. You do that earlier with your budget versus that Exports really gets heavy here. And then the top of the yellow bar, or big outcome sailor IPO, where you take what is a capital-efficient model and move to adjacent markets, new geographies. A lot happens here, too. You might have made some acquisitions before, but it’s all the more inclusive, a lot of international expansions are going acquisitions to tighten the platform, lot of compliance, and then also public market reporting and predictability that you need to come from out of it. So this is all the first insight, there’s a continuum that you’re on this process maturity lifecycle, know where you’re at, anticipate what’s coming next, and make decisions like building a home. How do you want the house to be people? What are different rooms that can be used for how’s it going to flow as the size of a family going to expand a contract? This is the same thing need to think about with your finance processes. Okay, so there’s our start. So what are the core elements you need to do in your finance tech stack, to be able to accomplish all of those, this is our second point? Be able to respond to customer and competitive needs. If you’re the wherever you’re at in the market, you’ve got competition, everyone’s trying to best understand the customer and best deliver the needs for them. So how do you quickly introduce new products to market and understand the cost position of those and how you should price them. The next one is to get your accounting in order before you start getting fancy. With that, came around for you guys there. When you think about your Chart of Accounts, think about what’s coming in the future. Put in great dimensional reporting, think about the tagging you on everything. Because with the reporting you want, you’re not going to anticipate everything gets good counsel, ask your provider and your implementer your board and peers but that was the core aspects you want to align your use case to the market. So how you build your primarily your quote to cash process, when we get into this couple, the next upcoming points is critical to be flexible to that flexible, frictionless customer experience, but then great reporting to get in. Because the more you can tie your use cases to what’s happening, the better off you’re going to be because exceptions can kill you. When you got to make up a number of 50 transactions or 100 transactions, it’s one thing to start getting to 500 1000 transactions can get really complicated. So what you want to do here is spend time with sales to be good partners. And ask the CRO and team what is it that’s going on? What is procurement teams, or what’s competitive pressure putting on you, and then work together in order to accomplish together a working plan, which reduces exceptions, because often sales just need to close something Throws over the fence to finance you just kind of catch it like, oh my gosh, how are we going to, you know, build this or recognize this. And again, if it happens a little bit one thing, but when you get in that continuum, and you want to prove the profitability and build compliance, those are the things that can really crush you. Sometimes you need to do a lot when you’re early on. And you’re still trying to fill out the market and build your sales efficiency. But be proactive and thoughtful about it. Understanding this is key. Because this is what you do in order to avoid code caching technical debt. Your customer wants to get the value and leverage the value that they’re getting from you. But then also what’s the billing and the pricing so they can anticipate their own cash flow. And so be clear on what you’re invoicing, be clear with what the price model is and put those pieces in place. So this is the second point. The first point was the process maturity curve. The second point is the core elements you need in place as you think about your tech stack that doesn’t exist independently exists in a continuum of all the departments wanting to understand what’s happening in there in their business lines in the p&l in order to pull it together.
David Appel 9:00
Let’s move on to our third point, what is in the checklist itself. So you can see build this out the pyramid. First off, set up your foundation, your general ledger is your system of record. And that’s what has compliance have their CRM system but it’s never audited, near as much as the GL is you want it set up, and then it’s from this is from whence all things flow with three-dimensional reporting. And we could get into the nuances that are there because I know not all of your technology companies that are listening to this money or nonprofits company that is creating and distributing excellent products or professional services or managing finances on behalf of your clients. But this is still the reporting that you need or what you want to put things in place to be successful. So then know your billing and invoice the cash use cases what we just talked about in the last night spend that time with the product team, with the sales team understand what’s happening I mean, and because they don’t understand counting, or revenue recognition, or what really goes into producing that PNA model. So share with them, learn from them and share with them so you can work together, or pull that together, then know your revenue recognition scenario, deferred revenue. So critical drift means more and more of the world moves to be subscription models. And it’s all dependent on what your billing model looks like, which we’re gonna get into, and the next slide, but be able to anticipate trade, that deferred revenue water for that has such an impact and valuation. And then, where’s your data coming from, from reporting, perhaps in the CRM system, depending on how you structure things with billing, or to pull different pieces together? Is it coming from outside systems from a customer success from the renewals process from billing, there’s a lot of this go slide to show love a little bit where it’s coming from, but understand these pieces, and then anticipate the exceptions in the selling process, because as we just talked about, they are out there, and they will get you and it’s hard to see around every corner, but you can talk to your board, you can talk to peers, talk to your auditor, talk to other folks around it. And of course, the sales team or Piercey arose sister companies about where could exceptions come from that you can handle, then compliance, you want to make sure all this will pass the sniff test, that it’s done, right. And, and, and well, just level pass the board and that your chairperson of the audit committee is going to be satisfied in your audit, it’s gonna be satisfied for all this. So this is point number three, all the different aspects that go into the finance techstep checklist in this pyramid starting at the top and working your way down in anticipation of everything. So billing use cases, I put some in here in order to try to pull them together. But there are so many different nuances that you could have in order to make this happen. So what’s the type and quantity of customers if you have a small number of very large enterprise deals, that’s one thing, or versus if you have a high volume, SMB or product lead growth models, it’s another or a hybrid model where you earn deals that are small price point, then they build their way up in order to have
David Appel 12:25
expanded into larger enterprise deals. And there’s a lot that can happen in there because then there’s different churn that you want to measure you want to manage against, you want to look at the net dollar churn, you want to look at logo churn. And a lot of different nuances here. And churn can be calculated in so many different ways that a presentation I do with one of the top investment banks looked at how 10 of the different public companies, calculate churn, and each of them is so nuanced. And you really have to get down deep into the disclosures. In order to understand all that, and this is something I’ve talked about, again, as the executive team, with your board, anticipate because you want to have some consistency and clarity, what is your reporting against? And then what’s the type of contracts you’re gonna have on monthly build on a credit card or annual, or multi-year because you want the kind of consistency and predictability and the number and then against that, it’s what are you going to try to measure against as the renewal rate versus the retention rate, because each of those different billing use cases as a different model underneath it, to pull it together? Our third box is the contracts pure subscription or transactional. So it’s usage-based billing becoming more and more used, how much of usage billing that you’re going to have in your system, versus a classic kind of transactional model if you’re charging for this many users or this many modules. And then for others of you that are financial services, you might be like within that percentage of the assets under management that is coming in, there are non for profits that are trying to really do a great job of donor management. And where’s that money going in the grants that you got? But each of those has a different measure? And how much is it doing ARR versus recognized revenue and ARR is the annual recurring revenue, sometimes car which is committed annual recognized revenue, depending on how far out your contracts are gonna go? And so that’s the measure. You want to put underneath that as you go against this. And then our fourth box, are you big land and expand? And then because if you try to just make it frictionless back to frictionless billing experience, we’re talking about this but also you’re trying to have a frictionless, frictionless customer initial usage, attraction, experience, what’s happening and then so how are you going to try to track ongoing net dollar retention that dollar retention is if you’ve got $1 Customer upfront how much more upsell you get overtime from them in order to make it successful? So how much of that is part of your model? Invest you want to have Gonna go in. And then the fifth box, what’s the expectation that you have based upon your stage where you’re the process maturity lifecycle in your growth as a company, so young and high growth and mature and low growth because each of those has a different expectation that the boards gonna be looking for, and measures that you’re gonna want to see, then how much seasonality and intermittent usage are out there. Because sometimes, depending on your model, there could be different flows of the business that you’re trying to put in place, based upon the cadence or when your customers are buying a classic example is school systems or people who sell to the government where they got a fixed amount of budget that they need to spend by a certain amount of time and window of opportunity, where they really come up for air in order to embrace and adopt new technologies. So this is our third box first launch process maturity lifecycle cycles, what’s in your should go on your checklist, the pyramid, here’s the third one is what’s happening with the clean use cases for the business.
David Appel 16:01
And then want to go deep a little bit on some of the different scenarios are out here, we’ve invested a lot of time and energy into how we designed the product in order to meet this because we’re the only combined subscription billing and financial management solution, which gives you one system of record or to manage all that it’s unique. And that because everything happens quickly, you’ve got a much faster, close up the 80% faster, and then all the data that’s there and create that frictionless experience, and you and finance is a great business partner, to your sales partners in order to help them out. So just to go deeper on this, there are so many different ways folks can do usage billing. I’m not going to go through all of these, but there’s a tremendous amount. We’re trying to match what the value is that you’re bringing to your customer with how you’re able to build them in order to put in great, fast ubiquitous billing in front of them. So they can anticipate their cash flow variable, recurring rollover, reset in all contracts, prepaid all these different things. And then all the aspects you need to deal with rating on rate changes happen or some included units or tiered pricing. When you make acquisitions and expand multi-tiered multi-currency, fixed price with the classic user and module price in handling those one-time charges, prorated charges, if you’re a little bit bigger, and you’ve got some project projects for your product in order to get implemented, how are you going to handle all the project billing that you’ve got out there and manage all this? And of course, all the downstream revenue recognition that comes with that. On your contract management, how easy how late were you trying to make it are you to deal with if someone asks for a change because there are so many contract amendments that happen to a contract over time as the pieces come together. So, amendments, the books, and discounts tell Incoterms renewals, then tying in with all the invoicing in order to have great accounts receivable, which is why everyone’s here, radiant system, tie in your great success here. So have the ability to put all these pieces in place, and how you handle frictionless billing. And there are the key parts that happen in the partnership that we have together with handling your credit management. You’re invoicing, all the different ways to get it out Self Service portals, handling collections, and all the different ways you can get the payments on the cash application with remittance and invoice matching, then trying to automate dispute management and how the dispute creation comes together. And so, back to building your tech stack, and everything’s connected together, the more thoughtful you are these pieces to put in here. So let’s talk about the key financial points. Which are buildings, AR bookings, collections health, the p&l credit risk monitoring, churn and retention, the PS backlog, utilization, and headcount. There are so many different reports you could say. And ultimately he talked about his executive team, and what is your board asking for from you. But this is what you want to have in place to put in because billings tell you what’s going to be happening within the business and anticipate what you think then happen with cash flow. And this is certainly in the early day’s new customer acquisition, but then net dollar retention every all these pieces coming together. And your bookings coming out of your CRM system. You’ve been able to anticipate working with sales. What do you think the forecast is both hasn’t closed yet? What’s coming to put the pieces in place, and collections health what’s happening with DSL, this is so critical to cash flow, understand what’s the core of the business and your p&l in sharing this with your different business leaders, so they understand what’s happening. Of course, headcount is one of the biggest expenses from a technology company and then commissions on the sales side
David Appel 20:01
and have to tie all this together with a thoughtful P FPGA tools, really what’s going to help put you in a good spot to be successful in your credit risk monitoring back to what size customers do so in large enterprise deals or SMB deals, how those are coming to churn and retention to it’s so critical your net dollar retention, showing us a great sign of profitability and success of the business model, EPS backlog and utilization because when we have professional services, that’s going to be expensive. And so what is your ability to manage the cash flow on that, but then also the delivery and deployment of products if people using the product happy customers, as soon as possible should get rollers accounts, get the referrals from them, then headcount because one of the biggest expenses that you have as a company, we’re trying to put this all together. And here’s an example. And this is a sample from our product, our SAS metrics dashboard, where because you’ve done all those things that we just laid out, you know, what your flow is, as a company, you build that remember that pyramid, your, your, your GL quickly, and then understand your billing use cases know what the revenue is gonna look like, and attributing the dimensions to it. Because it’s all in one system, you’re close again, is up to 80% Faster, you get this data as an executive team to understand what’s happening in order to pull it all together. CMR per customer and this is manipulable, and editable by you and how you want to get into it. And each of these you can double click into, and take it all the way down to the transaction level. And ask questions about it. And do type and chatter and all that. And if you’ve got a connection with HubSpot, or Salesforce, push the data back and forth so that sales and finance understand what’s in customer success and other professional services, the list goes on to communicate with one another. And you get beautiful dashboards like this, these are all samples of what’s coming in this one happens to be bookings and revenue. To be able to track all of this get the graphical and each of these clicking in just any dimension that you want to see, you’re able to pull together. Great product, here from high radius and the ability to see the health of the collection and tracking all this you get the sales and the buildings and the revenue and the cash and our end and collection cells on this end. Again, because it’s all with us in one complete system, we had budget versus actuals. The ability to drill down to the p&l leaders can see what’s happening. You can do your cash forecasting, again, you’re able to set this up. Anticipate what you think future positions are best communicate this with the board and make the best decisions and back to share this with the shared consciousness for the cathedral building that you’re attempting to do. The time credit risk monitoring, headcount tracking, and forecasting. Going to work with HR, let’s look at one of your biggest expenses that you can put out there in order to understand what’s been able to anticipate it and be more thoughtful for your F PNa. And again, I’d love to stress and get us up to 80% faster than if you tried to do all this on your own without planning for your renewal forecasting. MRR forecasting. And I want to share one thing on this because most people think about this and just add one product and feature to the tech stack at a time. Forgive how the graphics are off there as we switch into the hybrid format. But when you do it this way, there are more integrations means more time spent being manual, which means that delayed close and there are multiple systems of record, which means the reporting is delayed and inaccurate. This can really affect the reporting and seeing everything. And so what we did with one of the best boards in the world, with emergence capital, battery ventures, Bessemer, Venture Partners, Silicon Valley, bank, and others, just, here’s where the pucks going, everybody’s gonna want to understand all this. So put it all into one workflow, one platform would have put their billions of scenarios, your revenue recognition expenses, the core accounting allows you to accelerate the close go global reporting the compliance pieces that you need there, and then tied into your use of high radius with us as the coordinate system of record and be able to tie into the other departments that happen all around that flow.
David Appel 24:18
Here’s a great case study of a joint customer that we have our Armanino to a top accounting and consulting firm and classic issues, annual dependencies like we talked about silo processes now system of record, and then trying to automate the core process on buying cash and collect in the past two and look at the impacts that they had. 70% How to invoice matching rate less than two months 35% increase in productivity and 75% plus faster cash processing. And so with us, you just get the core essentials that you need to IPO and beyond with over 300 different scenarios. Over 200 investor reports create up to 80% Fast you’re up and running as fast as 60 days and cost 40% less than the different tech stack pieces separately. I want to say thank you to all of you for spending the time with me, I hope we went through these five things in the deck to understand the core essence of what you need in order to build your tech stack. And to go back to that slide. How do you create a frictionless experience in Mexico reporting? How do you build a checklist for creating your stack? What is the reporting you need? What are the scenarios to support so what should go into your finance tech stack owner so the tips and tricks about being proactive and thoughtful, more investable, the most successful way? I am?
David Appel 25:44
David, Apple david.apple@sage.com david.apple@sage.com If you wish to reach out and ask any questions of us, either myself or someone on the team, go to help out or feel free to connect with me on LinkedIn to all our great partners in a high radius. Thank you very much for having me. I wish everybody a great show.
