The Role Of FP&A In A SaaS Start-Up
The role of FP&A teams (Financial Planning & Analysis) has evolved significantly over the years.
FP&A has always played a vital role in improving business operations. These departments tackle various fundamental tasks, including:
- Forecasting sales and cash flow to put financial performance in context
- Monitoring key metrics like customer retention, churn, and acquisition costs
- Tracking the revenue generated by new and existing business
- Setting benchmarks for the business around revenue, new clients, etc
However, in modern businesses, these teams are becoming more influential than ever.
While historically FP&A experts may have played a purely back-office analytical role (producing reports and handling data) they’re now fuelling wider business decisions.
FP&A teams have access to more data than ever before, and with the help of advanced software, they can conduct more complex analyses to guide businesses in the right direction.
This is particularly true for SaaS start-ups, where the right FP&A hires can completely transform business performance.
Since the SaaS business model works primarily around regular subscriptions, FP&A teams can forecast numbers with a strong degree of confidence. This allows them to deliver solid financial strategies and clear recommendations for the future.
We’ve outlined the three main positions involved in SaaS FP&A departments, and identified the key features of each role - so you know exactly what to look out for when hiring.
An FP&A Analyst will often join your start-up straight from university, or from a junior role in investment banking.
An average analyst’s salary might fall between $80,000-$120,000.
They’ll generally have between 1-4 years of experience and are usually Excel wizards with a keen eye for financial modelling. Ideally, your FP&A Analyst will also be able to handle day-to-day budgeting and forecasting tasks to keep things ticking over.
An FP&A Analyst will also be improving their ability to identify key SaaS metrics and KPIs, alongside creating automated models. But they may need some initial support in this area.
Overall, your FP&A Analyst hire should be adept at financial modelling and able to manage daily tasks independently. However, they’ll likely need some training from more experienced analysts to help them expand their skillset.
An FP&A Manager will have an advanced understanding of financial analytics. They’ll be able to perform all of the regular tasks assigned to an FP&A Analyst at a very high level.
An average manager's salary might fall between $130,000-$150,000.
FP&A Managers can be relied on to produce complex models autonomously for all quarterly and yearly reporting needs. They’ll also have an in-depth understanding of core SaaS metrics, and will know how to interpret key data to create insightful visualisations.
You can expect an FP&A Manager to effectively lead a team of 3-5 analysts.
Crucially, an FP&A Manager should also be able to contribute to wider business strategy and decision-making. They’ll be confident sharing data and recommendations with senior leadership, and able to support different teams across the business.
A strong FP&A Manager hire will be able to work independently on the majority of tasks, but the ability to offer strategic thinking is also a major bonus.
Director of FP&A
The Director of FP&A will have the confidence and experience to lead an entire FP&A department. They’re effectively the glue that brings all of the financial data together and ensures that FP&A outputs are clear and impactful.
An average director’s salary might fall between $170,000-$200,000+.
Your Director of FP&A will be able to tackle high-level thinking while also understanding the technical details of day-to-day tasks. They’ll know the most important metrics to track and monitor, but more importantly, they’ll know how to transform these into actionable insights.
A skilled Director of FP&A will also be able to work closely alongside the CFO, sharing key tasks and contributing towards financial planning.
Plus, they’ll be able to support departments across the business. For example, helping marketing teams to calculate a clear ROI, or providing sales teams with accurately predicted revenue.
A Director of FP&A will also be able to finalise board packs and interact confidently with senior leadership. Boardroom experience and a strong meeting presence is a big help in this role.
Your Director of FP&A may be slightly less hands-on with daily tasks and modelling, but they should be able to turn the FP&A department into a well-oiled machine that facilitates consistent growth within the business.
As you continue to hire FP&A professionals and expand your department, you’ll be able to assign analysts to specific areas of your business.
Close integration is key to a successful FP&A team - constant communication will allow the FP&A experts to provide the most value. A defined structure is also important, meaning each member of the team has a clear role to play in guiding and informing the business.
If you need any guidance with your own FP&A hires, don’t hesitate to get in touch with Chris Short (email@example.com) for additional support.