A critical aspect of a CFO’s role at a startup is facilitating the creation and implementation of a strong, comprehensive reporting structure. This reporting algorithm should evaluate the current health of the business by identifying key sensitivities in the business model, tracking progress in scaling the company, providing a useful dashboard for each separate department and serving as a tool both the CEO and management team can use to grow the business. Additionally, a great reporting package will allow you to analyze your current data to identify upcoming trends.

Current state of the business.

It is essential that everyone understands fundamental metrics, like what it cost you to acquire a customer and what the lifetime value of your customer could potentially be. For this reason, implementing an SaaS dashboard has become table stakes today. In the comprehensive reporting package you should show key financial statements, headcount versus budgeted hiring, bookings data and other important metrics. This will help everyone understand where you are today and how actual results compare to your short and long term goals.

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Key sensitivities.

Do you know how much of an impact reducing churn has on your recurring revenue? How about driving more productivity from your existing sales reps, both today and as you scale up your sales organization? It is critical that everyone grasps the sensitivity of all the key business drivers in your organization. As a CFO, creating a financial model that captures all of these elements and allows you to clearly communicate the impact on key metrics is essential. Remember that in the SaaS model, investment decisions made in the short term will have the most impact in following years, but won’t have a dramatic impact on current metrics.

Tracking progress.

It is critical to establish a rhythm for monthly and quarterly reporting. Depending on the nature of your business, it might make more sense to report on a monthly basis versus a quarterly basis, or vice versa. In any case, there should always be monthly reporting so that you can react to any trends that emerge and make wise decisions to impact your current quarter.

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Departmental dashboards.

For departments, it is important to have high level metrics in the standard company reporting package. Here, reports that cover the effectiveness of components like the marketing and sales funnel, customer retention metrics, engineering metrics and hiring by department are essential, mainly because the reports allow the senior team to understand the metrics across each area within the company.

Beyond company-level reporting, you should have more detailed internal reporting for your department. These reports should concisely compare the actual performance of your team each month and quarter to the specific goals that you’ve set. This dashboard will not only make it easier to evaluate the performance of your investments and team, but also fosters a collaborative environment as you work on allocating resources in the future.

Managing the business.

Is your reporting analysis a key part of evaluating your strategy and its effectiveness? Does it play a key role in discussions with your board of directors? Have you set up a recurring meeting where your management team can discuss actual results and metrics along with reviewing long-term strategy? These are all key elements of the structure you should implement as you are scaling your business. A thoughtful and thorough approach to reporting should allow you to use your reports and data to manage your business and leverage that information when it comes time to report to the entire company and your board.

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Evolving indicator.

One constant in your reporting structure should be adaptation to changes in the business. Are you identifying emerging trends and escalating them to the right departments in your monthly reporting? By analyzing your core standard reporting and metrics, you can dig deeper into the data to evaluate emerging trends and pay them the attention they deserve. If you notice customer retention issues, for example, your reporting metrics will help you better understand what factors are driving this change.

Evaluating the impact that channels, verticals, geography, usage and other factors are having on your customer retention, then developing a strategy for improvement, will help increase retention of existing customers. This will also help you refine your ideal customer profile and lead to a more efficient sales and marketing process for growing your customer base.