Recurring revenue businesses have become the stars of the investment world. Investors love stable, recurring revenue streams. Valuations are tied to the health of our recurring revenue. But how do we measure the health of our recurring revenue? We use gross dollar retention (GDR) and net dollar retention (NDR). As operators of our SaaS businesses, […]
Author: Ben Murray
LTV to CAC Ratio of Three | Myth or Legend
Almost everyone in SaaS has heard of the LTV to CAC ratio. And almost everyone has heard that we should target an LTV to CAC ratio of at least three. This was popularized (I believe) by the great content published by David Skok on SaaS metrics. But what does it mean to have an LTV […]
SaaS R&D Tax Credit | What Founders Need to Know
Taxes! It can be a scary subject both personally and for your business. As a CFO, I don’t like to bend the rules. Who wants to be audited? But what if I could tell you about a tax credit that was almost custom made for US-based SaaS companies? It’s called the R&D (research and development) […]
Five Critical Reports to Manage Your SaaS Business
There are hundreds of reports that we could create to manage our SaaS businesses. In fact, I’m sure our CRM, accounting, and BI systems are littered with reports that no longer see the light of day. With so much data trapped in our SaaS business, it can be extremely hard to limit our focus to […]
How to Grow Your SaaS Business with Debt Financing
You’ve bootstrapped your SaaS business to thousands or millions of dollars in revenue. You feel like you have more potential to grow, but you are limited by the cash in your bank account. You need capital, but where do you start? We are all familiar with the traditional path of equity financing, exchanging ownership in […]
The Role of Finance and Accounting in SaaS
The role of finance and accounting in a SaaS company is probably a mystery to most. Yes, we pay the bills and say “no” to a lot of expenditure requests, but there is a lot going in the back office. And, as your SaaS business scales, so must the capabilities of your finance and accounting […]
Bookings vs Invoicing vs Revenue | The SaaS Revenue Cycle Explained
The SaaS revenue cycle all starts with bookings. But what is a booking? And how does a booking differ from invoicing and revenue? SaaS is full of metrics, but in this case, we are mixing SaaS and accounting terminology to make things even more confusing. In this post, I will explain the differences among a […]
SaaS Operating Leverage | Key to Better Margins and EBITDA
As your SaaS business moves into growth and scale mode, you will be very focused on SaaS gross margins, EBITDA, and EBITDA margins. With this financial focus, there are two ways that I think about profitability and margins. I manage my P&L by splitting it into two distinct sections to understand my operating leverage. The […]
SaaS CAC Ratio | How to Calculate and Why It Matters
The cost of customer acquisition is one of the most analyzed SaaS metrics. But it doesn’t have to be complex or hard to calculate. Enter the SaaS CAC Ratio. Or Cost of ARR as I call it. Slightly different than CAC (customer acquisition costs), the SaaS CAC Ratio studies the relationship between new and expansion […]
Free Focus on Cash Course
Greetings, I created a free course over the weekend to help those businesses thtat might be facing a cash crunch due to the corona/covid virus. Check out the course here. It’s posted at The SaaS Academy. 350+ have enrolled as of last night. Eleven video lessons ranging from 5 to 10 minutes. Also, if you […]