Forecasting & reporting in a recession: what CFOs need to know

When the market goes south, you need to have your forecasting and reporting capabilities dialed in more strongly than ever.

In-depth and accurate reporting will enable you to keep your board and team up to date and confident that you can ensure continued profitability. Forecasting will help you analyze the impact of different plans and decisions before you commit to them. 

Automation is helping SaaS companies thrive despite the recession with more accurate and effective financial planning and analysis (FP&A). 

Recession FP&A requires accurate forecasting

One of the best ways to outwit and outcompete your SaaS company peers during a downturn is to be able to see the future. Automated forecasting gets you as close as humanly possible to being able to do just that. 

When you know you can count on accurate forecasts to help you with recession FP&A, you’ll be free to explore every possible cash flow avenue, such as:  

• Switching billing timeframes: When times get tough in the market, look for strategies to speed up payments you’re expecting. Offering an annual billing option for a slight discount is a great example of this, and can help provide a cash flow boost during hard times. 

• Knowing Your Cash Burn Rate: For recession FP&A, your cash burn rate (CBR) is one of the most important metrics to follow. Your CBR tells you how many months’ worth of expenses you can cover with your current cash reserves. Automated forecasting allows you to plug in an endless variety of different factor combinations, so you can instantly test what your CBR would be under different circumstances.

• Offering a free trial: It’s important to incentivize your prospects as heavily as possible to sign up for your company’s services–and everybody loves the chance to try something for free. Automated forecasting can help you see exactly how any discounts you offer will impact your bottom line, so you can give your customers the best deal possible while still acting in your own best interest.

• Paywall removal: Removing various paywalls to attract more customers is another popular way to attract new users during a market downturn. If you have paywall-gated content that performs exceptionally well, consider making that content freely available to draw in new users. Automated forecasts can help you determine which paywalls you can afford to remove for strategic purposes and how long it would take you to recoup the paywall funds.

• Forecasting hiring decisions: Hiring is one of the more complicated aspects of recession FP&A because it involves many interlocking components. Do you know which departments would benefit most from new talent and what results you hope to achieve? Do you know precisely how much you can afford to spend? Cloud-based forecasting will allow you to hire confidently by answering all these questions and many others.

Moving away from manual methods and embracing automated forecasts is one of the best moves you can make for recession FP&A. But it’s hardly the only one.

Robust and accurate SaaS reporting for a recession

Accurate cloud-based reporting is just as crucial to have in your tool belt when the market turns for the worse. Automated accounting software will facilitate in-depth reporting on essential metrics such as your:

• Customer growth and expansion KPIs: In challenging economic times, your future trajectory is more important than your current position. In other words, focus on long-term growth rather than fast money. Metrics like expansion MRR and upgrade MRR should be watched closely, as well as daily and monthly active users (DAU & DMU). These metrics will help you create a steadily growing customer base over time.  

• Net promoter score: Your net promoter score relies on your customers’ answers to online surveys, with scores ranging from 1-10 as answers. As the simplest example, imagine you send out one survey with a “general satisfaction” rating of 1-10. Most companies consider 1-6 as negative reviews, 7-8 as neutral, and 9-10 as indicating your “promoter” customers. Your promoter score is the overall percentage of promoters you have relative to overall survey respondents. 

• Onboarding engagement rate: Especially for corporate software products, the new user onboarding process tends to involve various tutorials and intro videos. Your onboarding engagement rate helps you gauge whether your customers are interfacing with this key content or not. This especially matters during a recession: if people aren’t heavily engaging with your product in the opening stages of use, that doesn’t bode well for user retention.

• Outstanding support tickets and average resolution time: These are essential customer success metrics for tracking your recession FP&A efforts. Showing a low number of outstanding support tickets at your next board meeting will help establish that your user interface isn’t problematic for your customers. And a low average resolution time for complaints and questions means you have a well-run customer service department. 

Automation is your best bet for generating accurate financial reports to help steer your recession FP&A game plan.

Embrace the cloud for recession forecasting & reporting

Forecasting and reporting in a recession are too important to leave to spreadsheets and manual processes. There are ways to cut the timing to produce your metrics, and reduce your variance, by up to 80%.