Why the Year-End Closing is Important for SaaS Companies
The year-end closing is an opportunity to take stock of the company's health and ensure that everything is in balance—from financial records to future strategies. It’s also a time when you can optimize costs, subscription models, and present a clear performance report to investors and stakeholders. Simply put, a well-planned year-end closing can be the key to starting the new year with strengthened growth potential.
Automate your year-end with Fenerum.
1. Review of Financial Records
The first step toward an effective year-end closing is ensuring that all financial records are accurate. For SaaS companies, it's essential to have a clear overview of invoicing, subscription revenues, and deferred income.
We recommend reviewing the following:
- Bank reconciliation
- Invoices and receivables
- Deferred income
You can typically review these items in your financial or subscription system. In Fenerum, you can easily export debtor lists, EU sales, and deferred income, making it simple to report to your accountant.
Once the financial overview is in place, it’s time to assess the cost structure and optimize cash flow. How do your company’s fixed costs look, and are there areas where costs can be cut? Ensuring a solid cash flow is crucial, especially when growth may require additional investments.
2. Adjust Contracts and Pricing
The year-end is a good time to evaluate your subscription models and pricing. Consider whether your ARPA (Average Revenue Per Account) accurately reflects the value you're delivering to your customers. It’s important not to underprice your product, while still remaining competitive.
At the same time, it’s crucial to ensure that all contracts are updated and reflect current subscription terms. This includes both existing customers and any new contracts that may have been signed during the year. In a subscription management tool like Fenerum, you can easily adjust your prices across packages and implement changes at the next renewal, whether billing is monthly, quarterly, or annually.
3. Review Internal Systems
At year-end, you should also take some time to review your internal systems. Are there systems you no longer need? Are there better alternatives to the solutions you are currently using? There can often be savings by consolidating multiple processes into one system.
If your company is, for example, considering switching subscription management systems or financial systems, the year-end is a good time to make this change, as it allows you to start the new year from scratch. Also, ensure that all systems are up to date and secure, so the company can avoid potential security breaches in the coming year.
4. Investor and Stakeholder Reporting
Reporting to investors and stakeholders is an important part of the year-end process. This is your opportunity to provide a clear and precise update on the company's status and progress. With data from Fenerum, you can generate reports on key KPIs such as new customers, MRR, ARR, ARPA, churn-rate, and much more in just a few minutes.
At the same time, it’s a good idea to follow up on the company's budgets and evaluate how the business has progressed compared to the set goals. This also gives you the opportunity to present new targets for the coming year, which can be based on insights gained during the year-end closing.
Learn more about what should be included in your 2024 board report.
5. Ensure Compliance and Regulatory Requirements
SaaS companies must comply with a wide range of regulatory requirements, including GDPR and international accounting standards. A review of these at the year-end is essential to ensure that the company avoids potential legal issues.
Ensure that licenses and agreements are updated and in accordance with local and international regulations. This can save time and resources in the long term and ensure that the company operates within the legal framework.
Conclusion
A structured and thorough year-end closing can be the key to ensuring continued growth for your SaaS company in 2025. By reviewing financial records, adjusting contracts, ensuring compliance, and preparing reports for investors, you can lay the foundation for success in the coming year. With the right tools and systems, many of these processes can be automated, allowing you to focus on making the strategic decisions that will drive your business forward.
Get a free demo of Fenerum and see how our subscription management tool can help you automate subscription billing, bookkeeping, and reporting, making your year-end closing a breeze.
30 May 2024, By: Fenerum
