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Fathom Tips: SaaS Companies
Fathom Tips: SaaS Companies

Best practices for SaaS business analysis, forecasting & reporting

Updated over a week ago

Contents

πŸ’‘ Pro Tip: You can download and view a sample Fathom SaaS report at the bottom of this article.


SaaS metrics or KPIs

While Fathom has several default financial KPIs (Key Performance Indicators) to choose from, you can also create custom KPIs to track for your SaaS company or client.

There are four main types of custom KPIs:

Custom KPI Type

How a SaaS company might use it...

Import and track data outside of your Charts of Accounts, such as:

  • Net Promoter Score (NPS)

  • Number of Customers

  • Number of Staff

  • Average Customer Lifetime

Track the performance of important accounts or headings at a glance, such as:

  • Cash

  • Accounts Receivable

  • Short Term or Long Term Debt accounts

Create custom formulas using your financial and non-financial results, such as:

  • Churn Rate

  • Conversion Rate

  • Revenue per Full Time Employee

  • Average Revenue per Account or Average Revenue per Customer

  • Monthly Recurring Revenue (MRR)

  • Annual Recurring Revenue (ARR)

  • Customer Acquisition Cost (CAC)

  • Gross Revenue Retention (GRR)

  • Net Revenue Retention (NRR)

  • Revenue Churn %

  • Customer Lifetime Value (CLV)

If you have divisions (e.g. classes, locations, tracking categories), then you can track the performance of a metric for specific divisions, such as:

  • Total Revenue

  • Operating Profit

  • EBIT Growth

Library KPI
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Fathom has some KPIs included in the KPI Library by default. You can add these KPIs to your SaaS company and enter the data for them into Fathom or import the data through Google Sheets or Excel.

  • New Customers

  • Number of Qualified Leads

  • Lost Customers

πŸ’‘ Pro Tip: You can also filter variables by division when creating a custom Formula KPI to essentially create your own custom Divisional KPIs.

Learn more about setting up KPIs for your SaaS company or client by seeing our 'Step 4 - KPIs' article.


Reporting for SaaS

πŸ’‘ Pro Tip: You can download and view a sample Fathom SaaS report at the bottom of this article.

To provide context for a SaaS company's financial performance, you may want to include metrics like churn rate, conversion rate, or the number of new subscribers or leads during a period.

Before bringing this data into a report, you must create custom KPIs to track these metrics in Fathom.

After these KPIs have been created, you can report on any KPI data with:

πŸ’‘ Pro Tip: If reporting for several SaaS companies, you can copy custom KPIs and custom report templates to other companies in the same Fathom organisation.

For more general information on reporting in Fathom, please see the following articles:


Forecasting for SaaS

SaaS companies may have quarterly or yearly contracts with their customers. Accurately forecasting cash flow for non-monthly contracts or subscriptions requires a mixture of microforecasts and timing profiles.

For more general information on forecasting in Fathom, please see the following articles:

πŸ’‘ Pro Tip: You may also want to watch our 'Forecasting for Funding' webinar. It discusses forecasting to obtain funding and uses a SaaS company as one of the example companies.


Annual or quarterly subscriptions

If your SaaS company offers monthly subscriptions to its software, a monthly timing profile will forecast the cash flow for those subscriptions.

For non-monthly subscriptions, such as yearly or quarterly contracts, microforecasts must be used to forecast the impact of subscription revenue on cash flow.

  1. In the forecasting grid, select the revenue account that houses the non-monthly subscription revenue
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  2. In the menu on the right, click the green + next to 'Baseline Value Rules'
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  3. Choose Constant / Growing as the calculation method
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  4. Type 0 as the constant value
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  5. Select the green Create rule button
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  6. From the left sidebar, select the Microscope icon
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  7. In the menu that opens, select + Create microforecast
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  8. Name the microforecast for the group you're forecasting for

    1. E.g. If forecasting for the January subscriptions, name the forecast 'January subscriptions'
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  9. Select + Add account
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  10. Choose the revenue account you set to 0
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  11. Select a cell for the revenue account
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  12. Add rule
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  13. Choose the appropriate value rule to forecast the monthly revenue amount

    1. E.g. If the monthly revenue amount is expected to be $100, create a 'Constant / Growing' rule and set the constant value to $100
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  14. Select the green Create rule button
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  15. In the menu on the right, select the Three dots icon next to the collection or timing profile
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  16. Select the appropriate timing profile

    1. E.g. If forecasting yearly subscriptions, select an annual timing profile
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  17. Select Create profile
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  18. Click the back arrow in the top right corner
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  19. In the microforecast menu, select the Three dots icon next to the microforecast you just created
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  20. Select duplicate
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  21. Go into the new microforecast and change the value rule and timing profile to forecast the revenue for the next group

    1. E.g. If you forecast the January revenue in the first microforecast, forecast the February revenue in this microforecast
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  22. Continue duplicating microforecasts until you have all of the revenue groups

πŸ’‘ Pro Tip: There is a limit of 50 microforecasts for each forecast. If you are encountering this limit and need to forecast non-monthly contracts, you can use future accounts to forecast each cohort (e.g. January contracts, February contracts, March contracts) all in the same microforecast.


Additional knowledge & common questions

Sample report

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