S6E11 – The SaaS CFO Playbook: Metrics, Margins, and Financial Strategy for Founders with Ben Murray

In this insightful episode, we explore the core financial principles crucial for building a scalable SaaS business. Our guest, Ben Murray—widely known as the SaaS CFO—brings over two decades of finance and operations experience. Having served as CFO for multiple SaaS companies, Ben now dedicates his efforts to helping founders and finance leaders make smarter, data-driven decisions. He shares his acclaimed Five Pillar SaaS Metrics Framework, offering templates, courses, and guidance for mastering SaaS financial metrics.

Importance of Financial Reporting in B2B SaaS

Ben highlights that traditional financial reports from basic accounting tools don’t cut it in SaaS. Given the unique economics and business models in SaaS, founders must go beyond income statements and balance sheets to gain meaningful financial insight. A deep understanding of metrics and reporting enables better decision-making and long-term growth.

Common Financial Mistakes in SaaS Companies

One major misstep? Relying solely on bank balances. Ben explains that while cash is critical, it doesn’t reflect true business performance. Founders often delay building a financial foundation, which leads to complications down the road. Savvy founders prioritize finance early—even before revenue arrives—to maintain clarity and avoid messy fixes later.

The Five Pillar SaaS Metrics Framework

Ben’s framework is a structured approach to tracking what matters most across the SaaS lifecycle:

• Growth: Track new customer growth, expansion revenue, ACV trends, and sign-ups.
• Retention: Monitor metrics like gross revenue retention and net revenue retention.
• Margins: Understand gross profit margins and margins by product or service line.
• Financial Profile: Evaluate metrics such as EBITDA, Rule of 40, and OPEX ratios.
• Efficiency: Analyze go-to-market and organizational efficiency using CAC, LTV to CAC, payback periods, and cost of ARR.

Starting with SaaS Metrics

For early-stage founders, Ben recommends starting simple: build sound bookkeeping habits, understand cash flow, and set up an accurate SaaS P&L. As the company grows, shift focus to bookings, retention, and forecast models that support smart investments and scaling strategies.

Implementing the Five Pillar Metrics Framework

To apply the framework effectively, Ben outlines four essential SaaS finance data sources:

1. Financial data
2. Customer revenue data
3. HR data
4. Bookings data

A strong tech stack should support these sources, ensuring clean, actionable data. This data underpins forecasts, planning, and operational decisions, as well as due diligence during fundraising or acquisition.

The Role of Technology in Financial Management

Technology plays a key role in building a scalable finance function. Founders should leverage tools for accounting, invoicing, revenue recognition, and tax compliance. While Excel and Google Sheets are still useful, SaaS-specific tools improve efficiency and accuracy in reporting and planning.

Challenges in Understanding SaaS Metrics

Many founders misinterpret or overlook their metrics by depending on basic financial statements alone. Ben stresses the importance of proactive financial management—timely book closures, ongoing forecasting, and competitive benchmarking. He encourages founders to use metrics for strategic improvements, like refining pricing or onboarding.

Best Practices for Financial Strategy and Growth

Ben shares a few best practices:

• Consider hiring a full-time or fractional CFO based on your stage.
• Build and maintain a modern finance tech stack.
• Create a consistent FP&A (financial planning & analysis) process.
• Close books regularly and review metrics with your leadership team.

These practices enable better planning and responsiveness as your company grows.

Addressing Popular Beliefs and Misconceptions

Ben warns against overcomplicating financial management. While it’s tempting to chase every new metric or tool, fundamentals matter most. Focus on maintaining an accurate SaaS P&L and forecast. Although the industry buzzes about AI-driven cost models and evolving ARR definitions, solid financial principles remain your best defense.

Navigating New Financial Challenges in SaaS

With AI and new revenue models on the rise, founders must stay informed. Changes in cost structures and pricing strategies can impact gross margins. SaaS leaders should understand their cost of goods sold and watch industry trends—especially as AI-first startups shake up the market.

Final Advice for SaaS Founders

Ben’s closing message is clear: Know your numbers. Start with clean books and disciplined cash management. As you scale, adopt the Five Pillar Metrics Framework to stay ahead of challenges, attract investors, and make informed decisions. Take advantage of resources like Ben’s blog, newsletter, and courses to strengthen your financial strategy.

Conclusion

This conversation with Ben Murray offers a comprehensive overview of SaaS financial best practices. His Five Pillar SaaS Metrics Framework equips founders with the tools needed to understand their numbers, build financial discipline, and scale sustainably. With the right insights and infrastructure, SaaS companies can confidently navigate the path to long-term profitability.

Key Timecodes

• (0:00) – Introduction: Importance of bookings data and financial management
• (0:41) – Episode Overview: Deep dive into SaaS finance metrics with Ben Murray
• (1:37) – Guest Introduction: Welcoming Ben Murray, the SaaS CFO
• (1:46) – Key Question: Importance of financial reporting for SaaS founders
• (2:16) – Common Mistakes: Mismanagement of business with cash flow
• (3:26) – Misconceptions: Finance as a priority in early stages
• (4:01) – Five Pillar SaaS Metrics Framework: Introduction and overview
• (5:16) – Financial Reporting: Growth and bookings data importance
• (7:31) – Getting Started: Foundational needs for early-stage SaaS companies
• (8:28) – Implementation Steps: Key data sources and tech stack
• (10:01) – Data Sources: Financial, customer, HR, and bookings data
• (12:32) – Challenges in Metrics: Understanding economic operations
• (15:10) – Financial Strategy: Importance of forecasting and metrics
• (18:08) – Best Practices: Building a scalable finance function
• (20:22) – Popular Beliefs: Complications and simplicity in financial metrics
• (21:45) – Gross Margins: Costs in AI tools versus traditional SaaS tools
• (23:12) – Opinion on Debt: Financing options for SaaS companies
• (24:54) – Community and Resources: Ben Murray’s offerings and insights
• (27:27) – Benchmarking: Accurate methods for comparing SaaS metrics
• (29:05) – Future Risks and Opportunities: Preparing for 2025 and beyond
• (30:54) – Key Advice: Essential tips for SaaS founders
• (31:12) – Advice for Early-stage SaaS: Financial foundations and forecasting
• (32:01) – Scaling to 10 Million ARR: Five Pillar Metrics Framework implementation
• (34:44) – Summary: Key takeaways from the episode
• (35:13) – Closing Thoughts: Final remarks and contact information

Transcription

[00:00:00.160] – Ben Murray

We need bookings data. How many new customers are you signing? What’s the ARR that you’re signing? How are you expanding incrementally your customer base? Because that data feeds go to market efficiency data. So if we don’t have good bookings data, forget about calculating go to market efficiency. You see all these posts? Well, ARR is dead and metrics don’t work anymore. And that may be the case, but for most SaaS companies it still works. So let’s not overcomplicate things because it does come down to just to basic financial management. Sometimes you build a great business where cash just works and it’s growing and you can get away with not putting a nice financial infrastructure in place. But that’s not the case for a lot of SaaS companies.

[00:00:41.620] – Joran

In today’s episode, we’re going to deep dive into SaaS finance metrics, margins and financial strategy. In short, everything founders need to know to build a financial, healthy and scalable SaaS business. My guest is Ben Murray, better known as the SaaS CFO. Ben has over 20 years of experience in finance and operation. He has served as a CFO for multiple SaaS companies and he now helps SaaS founders and financial leaders make better data driven decisions. He’s the creator of the Five Pillar SaaS metrics framework, has a community, over 80,000 subscribers to his newsletter and 20,000 students who attended his SaaS financing metrics course. Within this community you find templates, courses and insights about any SaaS research related metrics. In the next 40 minutes I will ask you about financial fundamentals, which metrics actually matter and how to build your financial reporting so the data becomes a strategic growth lever. Without further ado, let’s get started. Welcome to the show Ben.

[00:01:37.300] – Ben Murray

Great to be here. Thanks for having me on.

[00:01:39.700] – Joran

Why is financial reporting and tracking the right metrics so important for B2B SaaS founders today?

[00:01:46.500] – Ben Murray

For B2B SaaS founder it’s important because really with a SaaS business we cannot just manage our SaaS business with those financial statements, especially those new native statements that come out of our accounting software which are not set up for sas. There’s so many interactions with our business, so many different unit economics happening underneath the financial statements that we have to do more with the data within our SaaS business. So financial statement’s a key piece of it, but we have to do more to manage and grow our SaaS business.

[00:02:16.720] – Joran

What is the most common mistake you see SaaS companies founders make when it comes to their financial part of the business?

[00:02:23.930] – Ben Murray

Yeah, I talk to a lot of SaaS founders, help SaaS founders with my services, interview founders for my podcast. I think one is just that you can manage your business with your, your bank statement and with the available cash on hand. And again, that’s really important. Cash is king. You always want to be monitoring your cash and cash Runway, but that doesn’t tell you anything about how the business is operating. Sometimes you build a great business where cash just works and it’s growing and you can get away with not putting a nice financial infrastructure in place. But that’s not the case for a lot of SaaS companies. So I’d say just managing with cash, that’s a start. But then you have to truly understand the economics of the business and how you’re generating that cash. I see a lot looking at cash based financial statements, but really we have to go to crude, we have to look at the metrics, et cetera within the founder community.

[00:03:15.580] – Joran

Yeah, and I guess that that’s like one common mistake. Is there also another like misconception SaaS founders have when it comes to SaaS metrics? Or may even, I guess financial strategy.

[00:03:26.840] – Ben Murray

Finance and accounting, that priority of good books and good numbers can come later. And that makes sense. You’re focused on building the product, getting that MVP out there, building out a go to market motion and you forget about finance. You can’t ignore it because it can get messy later. Second time founders, third time founders and they reach out to me, focusing on the finance right away, even, even as they’re pre revenue building a product, they’re like, I want to make sure I have my accounting set up correctly. I have my P and L set up correctly. I see where second, third time founders make finance more of a priority.

[00:04:01.740] – Joran

Yeah, we’re going to dive deeper into that. You developed a five pillar SaaS metrics framework. Let’s start with that. Can you walk us through the five steps and maybe explain more?

[00:04:10.740] – Ben Murray

Yeah. We love our SaaS metrics, but where do you start? We need kind of a map, a guide to walk through the metrics for the right stage of our business. The five pillar SaaS metrics framework starts with pillar one, which is about growth. Growth. Where is our growth coming from? Is it new customers, existing customers? How is our ACV trending? How many new users or customers are we signing up? Good tracking of growth. Next is retention. So we acquire customers. Now are we retaining them? We’re tracking customer retention, gross revenue retention, net revenue retention. Third is margins. What is our gross profit margin important within SaaS? If we have multiple revenue streams. What’s our margin by revenue stream really important as well. Pillar four is our financial profile, EBITDA rule of 40, our OPEX profile. And finally pillar five is efficiency. Not only go to market efficiency like CAC, payback, cost of ARR, LTE, V2CAC, but also org efficiency. And then I developed a metric called rose metric which is the amount of recurring revenue generate for every dollar employee contractor investment. So that’s the framework and it’s a guide as we as we’re scaling our business to implement each pillar as we go.

[00:05:16.190] – Joran

Yeah, and I think a lot of SaaS founders or a lot of people think financial reporting is only the four step financial profile. You mentioned a lot of terms in just 10 seconds where maybe people wandered away.

[00:05:28.210] – Ben Murray

Can you explain more?

[00:05:29.060] – Joran

As in because you have the five pillar framework, right. You start with growth. It’s not typical that people think about financial reporting and growth, I guess combined because they again always think about ltv, lifetime growth, value, customer acquisition costs, et cetera.

[00:05:44.580] – Ben Murray

Yeah. So of course you have revenue growth. So you can look at your financial statements for that. But within SaaS companies we have two data sources for growth. One, you can look at your revenue, but we need to look at our bookings data. If you have a go to market motion signing mid market enterprise customers, a CRM system, you’re probably signing contracts with your customers and that creates bookings data coming out of Salesforce HubSpot, whatever CRM system you’re using. That’s one of the biggest data mistakes I see in SaaS. We need bookings data. How many new customers are you signing? What’s the ARR that you’re signing? How are you expanding incrementally your customer base? Because that data feeds go to market efficiency data. So if we don’t have good bookings data, forget about calculating go to market efficiency. But if you’re also like hey Ben, I don’t speak the bookings language, I’ve got a PLG product self service. Well, we still derive that bookings data from the MRR waterfall. And that’s our beginning MRR new expansion contraction churn. And we can derive our sources of growth and then feed that into go to market efficiency metrics.

[00:06:42.710] – Ben Murray

So that’s one of those big data mistakes that I see is not tracking that bookings data. We have growth via our bookings data and revenue growth.

[00:06:50.510] – Joran

When you say bookings data, you mean new clients or I guess not even new clients, but also as you mentioned, expansion.

[00:06:56.760] – Ben Murray

Exactly. The booking is an executed contract with our customers for software or services, whatever we’re offering. So that could be a new customer coming in or that customer is paying you 20,000 a year and we sell them some more product and now they’re paying 30. We have 10k of expansion and we’ve got to track that 10k because then we can figure out the efficiency on our expansion motion.

[00:07:18.180] – Joran

Yeah, yeah, yeah. So I guess like if people want to get started, what should people have minimum in place when they’re listening? Like I have no idea what is Ben talking about or how can it get started? Where do they start?

[00:07:31.400] – Ben Murray

It depends on their stage metrics for the right stage of your business because it can be overwhelming. I just had a founder email me this week and they’re like, hey, we’re just starting our product, you know, we’re pre revenue. What should we focus on in this early stage? Kind of that 0 to 1 million ARR and 1 is just a good accounting foundation. Let’s make sure we have our bookkeeping in place. Someone who knows SaaS software that they can put that proper accounting foundation in place, you know, so you go through these stages because we don’t have to worry about metrics from 0 to 1. Maybe bookings data, maybe a little retention maybe. But it’s about accounting watching our cash Runway and then we scale from there. We slowly work through the five pillar SaaS metrics framework. It depends on the stage you’re in.

[00:08:13.610] – Joran

At least having the bookkeeping in place and then the bank on the stage, it has to become more sophisticated. So let’s go through the five pillar metric framework. If somebody wants to implement it. What is like a step by step process you would Recommend?

[00:08:28.870] – Ben Murray

There are four key SaaS finance data sources that we need to operate our SaaS business. One, for operations. Two, if you’re going to go through due diligence, if you’re going to fundraise, if you’re going to exit, we need this data in place. Financial data, of course, good clean accounting data, the proper SAS PL in place. Founders can do so much just having that nice SAS PL in place because that can tell you so much. So one is accounting, accounting financial data. Two is customer revenue data. So we know for example revenue by customer by month. Three is HR data. How many people do we have? How many contractors, freelancers are we paying? Making sure all that gets coded correctly to the P and L. And then we have, we talk about bookings data. So four data sources that we need to have in place in order to have a good monthly financial process. So it starts with the data. Also kind of starts with the tech stack. What’s our accounting software, how are we invoicing, are we doing revrec, how are we handling sales tax compliance and so on? So we have the tech, we have the data piece and then that enables us to then create a forecast model, create that SAS P&L create the metrics that come off of my forecast model.

[00:09:36.580] – Ben Murray

But whenever I’m spinning up SAS metrics for my fractional CFO clients, it’s always a big data onboarding. Give me those four key SaaS, finance data sources. Let’s make sure the structure is correct, we’re getting the right data and then we can continue that process. So for me, for founders depending on their stage would be thinking about that and you know, then how we, how we can drive decisions with that data.

[00:10:01.760] – Joran

Yeah, you mentioned tech stack and getting the data in place. Do you still use old fashioned Excel sheets or always the same tools? What would you recommend there?

[00:10:12.070] – Ben Murray

Yeah, I think even, you know, I help a lot of founders kind of that zero. Well, couple million to 50 million ARR stage. A lot of times they just have accounting software, maybe some subscription management software. So if you’re say 5, 10 million of ARR and just have accounting software one, yeah, we make sure the accounting foundation is placed. But then to calculate retention we need that Mr. Schedule, we need the Mr. Waterfall. So we’ll get that native invoice data, customers start and end dates, product lines. We can create the MRR schedule, the MRI waterfall which creates retention calculations. We don’t need fancy tech yet, we need good clean data. But eventually we then hook up a subscription management system so we can invoice accurately, invoice timely. And then those systems also have revenue recognition systems. If we’re invoicing in terms longer than a month, it does speed up the process if founders have some sort of subscription management place because that, that system usually produces a lot of good data that we need in our monthly financial process.

[00:11:12.380] – Joran

Yeah, yeah. For example we have, I guess, I mean we’re a Dutch company. I made the mistake of getting a bookkeeper who has no idea about SaaS. So we have like our own P and L in a way where we just do it in Google sheets. I don’t know if you even stole your template or not, that he implemented quite a, quite a long time ago. Is that a good place to start?

[00:11:32.780] – Ben Murray

I use a lot of Excel, you know, so it’s fine. So depending, you know, in SaaS, like according to my survey and it’s country specific in the U.S. a lot of people use QuickBooks online outside of the U.S. 0. Then you see Sage, Netsuite and other country specific solutions depending on local compliance. But yeah, you can take that native PL and export it to Excel, Google Sheets, run through a mapping process and create this great looking SAS P&L. Because usually accounting software is very hard to put in that customer reporting. But yeah, you can export it, map it and then have this great looking SAS P&L. So you can see your revenue streams, your cogs, your correct gross profit, opex, EBITDA and so on.

[00:12:12.570] – Joran

If I could put it into accounting software, I would love to. I tried to get the American software to work but my bookkeeper didn’t like it. So we went to the good old fashioned Google sheets or Excel. Where do SaaS companies or SaaS founders struggle when really trying to get insights into their metrics of finance?

[00:12:32.240] – Ben Murray

Boy, I mean it’s a lot of things when I talk to a lot of founders really they’re managing their business just with the native financial statements coming from their software, their accounting application and that only gets you so far and oftentimes they’re just so messy you have no clue what’s happening economically within your business. So it’s, it’s then and they have a business growing, they want to hire, get investment or exit at some point. So we have to take it beyond that, you know, so we have to have one good clean financial statements, a SaaS P&L. We need a forecast in place. We have to start forecasting the business, forecasting cash Runway, forecasting all those new hires and where we wanted to invest in the business and does it make sense? And then from there, so sometimes it does default. Just a good financial management of a good SaaS P&L. Close the books on time, create a forecast and then from there. All right, now let’s start calculating some metrics. Let’s look at your retention, go to market efficiency and start putting metrics in place. We then benchmark how you’re doing against your SaaS peers.

[00:13:32.590] – Ben Murray

It helps us focus what’s working in our business. Let’s keep doing that. What’s not working? For example, SaaS companies offer onboarding, you know, onboarding and charge services revenue where they’re completely mispricing it. It’s a drag on their earnings, you know, so we can uncover things that are not working that then they can prioritize as far as what they want to focus on.

[00:13:53.790] – Joran

Yeah, yeah. And I can speak out of experience like I was out of customer Success at leadvidia, where we thought it was a good idea to manually onboard all our clients, we hired a couple of people where we started to onboard them, and then we created tiers in our client base. 4000 clients. We looked at retention within a tier. If they were onboarded or not, would it have an effect on retention? And in the end we found out that for the lower clients, like, it didn’t make any sense because if they wanted to churn, they would churn anyway. And having a call wouldn’t make any sense. So we could only do that with. Having proper data is really important.

[00:14:34.100] – Ben Murray

Yeah, yeah, definitely. I mean, I talk to a lot of founders who come to me and they’re like, hey, I’m just running financially blind. I have no clue. I can see revenue cash in my bank statement. But beyond that, what should I do next? We can put a good financial structure in place with the metrics, with the framework, so you know you’re headed in the right direction, not off a cash cliff or whatever might be coming up or you hire too fast. So it just. We want to go from historical data to now, being more proactive, looking to the future so we can steer the ship. Otherwise, you’re navigating blindly.

[00:15:10.290] – Joran

That’s probably what a lot of companies do. Look at the bank account, what they need to pay employees, and make their strategy from there.

[00:15:18.000] – Ben Murray

In the US I talked to a lot of SaaS companies who are implementing this EOS system, entrepreneur system or something like that and rocks and all this stuff and reading that book they mentioned. On the numbers side, imagine if you’re flying over the ocean. The pilot says, we have lost all instruments. We don’t know where we’re going, but we know we’re getting there fast. You know, it’s like, right, that doesn’t work. And that same thing with SaaS company. We have to steer our SaaS company with data and metrics.

[00:15:43.990] – Joran

Having a proper P and L is probably the first good thing to do. Are there any other simple financial rules a founder should do today to improve their financial strategy?

[00:15:55.290] – Ben Murray

Yeah, I would say one big thing. SaaS P&L, we get the right revenue streams. Cogs, departments, tech support services, customer success, DevOps that gives us gross profit. And then OPEX is R and D, sales, marketing, G and A. Getting that in place gives a lot of information. We can look at margins by revenue stream. OPEX profile as a percent of revenue. How are we trending against peers, ebitda, net income or net earnings. That’s a big thing, is just a nice looking SaaS P&L then just a basic forecast again depending on your stage. Make sure we have a forecast in place. Where’s revenue going? How many people do we want to hire? And again, you know if you’re over 10 million ARR, you should have a lot in place but if you’re you know, 3 million or less, it’s just those fundamentals to get that in place and Track bookings data. SAS P&L track bookings data and then figure out how you can create your MRI schedule.

[00:16:46.460] – Joran

Yeah, yeah. And you mentioned G and A. I personally never heard of that one before. What does it mean?

[00:16:52.760] – Ben Murray

GNA is General and administrative finance, accounting, hr, it, legal, the CEO, founder, those back office functions. So there’s a very. I’d say there are no standards in sas but the SAS P and L pretty accepted that we have our COGS area and what I mentioned before and then OPEX again would be R and D, Sales, Marketing and gna.

[00:17:13.430] – Joran

Yeah. And do you have a template that people can use?

[00:17:17.040] – Ben Murray

I’ve got tons of free templates. I’ve got a blog and maybe we could be in the show notes but it’[email protected] and you can download all my templates for free. And I’ve got, you know, the SAS P&L structure, what should be included in COGS. I just updated my OPEX profile, got stuff on RevReck. I’ve got a post on the five major SaaS revenue streams a lot on my blog.

[00:17:38.070] – Joran

For people I know there’s still a lot of acronyms and things might still sound like rocket science sometimes if you use a template like the one we’re actually using yours. So if you are using templates from Ben like you will be able to fill out everything without needing to understand like everything I guess what is mentioned today. But it should be a really good start when we turn it around. We talk a lot about mistakes, misconceptions. What are some best practices for building that function that supports growth and scalability?

[00:18:08.470] – Ben Murray

Yeah, I think you know, at some point, you know generally you have to consider hiring a full time CFO above 10 million ARR. Fractional CFOs kind of in that 3 to 10 or even 3 to 20 because you probably do need some finance champion owning this process. And again the tech stack is so important. The back office, right. We’ve got payroll, accounting, invoicing, revrec, sales tax compliance, expense reporting. Like the tech stack is so big in SaaS and it’s expanding. We have to have Almost like our internal product roadmap. And I publish my annual tech stack survey, which you can also get from my blog of what’s being used in SaaS companies. So you can see those top solutions, you know, so it’s the tech, you know, it’s the data. And really eventually you’re going to put what I, you know, FP and a process in place which is financial planning, analysis. We close the books, analyze performance forecast, understand metrics and then we have a financial review call. So I think that’s probably ignored in a lot of SaaS companies where they don’t have a finance champion is just having that good finance routine in place.

[00:19:11.640] – Ben Murray

Even if you have an outsourced bookkeeper, which is so common, under 10, rarely do I see someone in house is let’s make sure we close our books on time. I see a lot of this where outsourced bookkeepers, it takes them two, three, four weeks and then we’re into the next month. We need financial statements faster than that. My expectation for outsourced bookkeepers is they have the books closed by mid month, at least by the middle of the month, you know, then the founder, the founding team, exec team, you know, just review those numbers. You know, where is cash trending, revenue trending, basic financial management. So if you can start there to make finance part of your executive process, then that will be a start because you need finance data. SaaS companies take a very formulaic approach to scale and that’s why the framework and the data is so important.

[00:20:02.790] – Joran

Yeah. So close the books earlier to I guess to figure out quicker what’s going on so you can act on it. What is a popular belief you have a big following on LinkedIn. Like you probably have a lot of people who you follow where you’re like, well, I don’t really agree with. Regarding financial metrics within SaaS. What do you disagree with?

[00:20:22.630] – Ben Murray

I think there’s. You see a lot of stuff in social media and I think sometimes people are trying to overcomplicate things or make things seem really complicated. You need to be doing this, this and this to manage our SaaS company. The basics. I’ve helped a ton of SaaS companies. I’ve seen different pricing models, subscription variable usage services, managed services, hardware. It comes down to good accounting, a good SaaS P&L, having your revenue categories separate and having a forecast in place. So let’s not make this complicated because it doesn’t have to be. I’ve followed this rinse and repeat process with those four data sources. We need to put in place. From there, we can put that nice process in place. Don’t get overwhelmed or discouraged if you see stuff on LinkedIn and different social posts of, you know, like, I’ll be speaking on this soon, actually, you know about ARR and variable pricing. You see all these posts. Well, ARR is dead and metrics don’t work anymore. And that may be the case, but for most SaaS companies, it still works. So let’s not overcomplicate things because it does come down just to basic financial management.

[00:21:32.320] – Joran

Maybe talk about what works and what doesn’t. For example, gross margins, are they still the same when you now look at like all the AI wrappers and I guess, like all the AI tools who do have a lot more cost than probably other SaaS tools?

[00:21:45.880] – Ben Murray

Yeah. And you know, that’s an interesting conversation right now because, yeah, it’s like, well, if you’re AI first, well, maybe you won’t have, you know, the 80% gross profit that’s considered best in class for SaaS companies. Maybe that’s true. But at some point, credits and tokens are becoming cheaper. We’re not there, but we’ll get there. Like when we first moved to the cloud and we had to buy servers and it was expensive and hard to scale, you know, same thing. So we, it’s still, I think, TBD that, you know, will AI run lower gross profit, but then maybe that will continue to scale up because, you know, compute power will become cheaper and credits will become cheaper, et cetera. So. But that is a good point. We just have to be aware of the cost to deliver revenue. When I say cogs, cost of goods sold, our cost of revenue. If you’re AI first and hooked up to OpenAI and that expense. Right. We’ve got to understand how much is it costing us to deliver revenue. So whether it’s AI or Amazon, we’ve got to watch that and see how our gross profit scales over time.

[00:22:45.940] – Ben Murray

Because that’s where I see a lot of founders get into trouble, is they have low gross profit. Say they’re running in 50s, they’re bootstrapped, they want to grow, they want to exit at some point. They don’t want to raise capital now because they want to control their own destiny. And it’s hard to scale that way. With low gross profit, you have to understand what’s causing it. You know, SASP and L and understanding your cogs departments and how that’s trending over time.

[00:23:12.190] – Joran

When somebody’s boot trapped, they haven’t taken any VAC money Like what is your opinion towards debt? I guess like any kind of other debt you can take as a, as a SaaS company, good or bad?

[00:23:23.210] – Ben Murray

Oh yeah, debt, yeah, it’s popular now. Software debt, recurring revenue financing to SaaS companies. A lot of players in that space now. I just wrote a LinkedIn post on that the other day. But yeah, a lot of founders want to take on some debt. I just took on a new helping a new SaaS founder where they took on their a bunch of debt and now they’re like we have to do something with it. It’s sitting in our bank account, we’re paying interest and we need ROI on that debt. So one with debt, it’s a good way, right? Again, not to give up equity, but you need to have a plan. You need to know your numbers, your economics, your cash flow, your ebitda. You have to have a forecast in place. Can I absorb those debt payments? Is it interest only? Is it principal and interest? Or do I have some big balloon payment, principal payment at the end that I’ve got to pay off or refinance or exit and that money then covers that debt. So with debt you really have to know your numbers, your cash flow pretty stable. If that’s the case, then it can be a good source because it’s got to accommodate your current cash flow so you can pay off that debt.

[00:24:29.700] – Joran

So don’t just take it. Coming back to the 5B SAS Patrick framework, get that in place before even.

[00:24:35.440] – Ben Murray

Yeah, know your numbers and then know what you’re going to do with it. Where are you going to invest? Is it to build your go to market function? Is it to build your product roadmap? But you’ve got to know, you’ve got to have a plan and targets to make sure you, you don’t just see the debt as a cost, but you’re investing and we’re getting return on that investment.

[00:24:54.070] – Joran

Yeah, makes sense. And I mean I kind of mentioned at the beginning already you have a huge community and a lot of resources. Tell me more about the community and how people can get value out of the community. Following your newsletter following your LinkedIn I.

[00:25:10.730] – Ben Murray

Started my blog in 2016, almost 10 years ago just to share my templates for the in depth post about SaaS metrics and finance and accounting and forecasting. My goal was to pay it forward and share what I’m accumulating as a SaaS CFO. I’ve built up to about 83,000 subscribers to my newsletter. You can join my newsletter through my blog. I sent a Newsletter today, talking about your OPEX profile, how to to benchmark it, you know, plus I’ve got a SAS metrics school podcast. So just tips and tricks on finance and accounting and metrics for SAs founders, for CFOs for SaaS operators. So I’ve got my newsletter, I’ve got my academy [email protected] where I have free and paid courses on SaaS metrics and SAS finance for CFOs, controllers, founders, accountants, those people new to SaaS. I’ve got a community. So I have, you know, a lot of different channels for distribution of my content. But my new newsletter is the main one where you can see like events that I’m holding and just different things that will help SaaS operators.

[00:26:12.430] – Joran

Yeah, what are the popular topics?

[00:26:15.710] – Ben Murray

Yeah, I think like SaaS metrics, benchmarks always very popular, you know, because say if you calculate your CAC payback, how does that compare against your peers? Is it good or bad? And you have to know that, especially if you’re going into due diligence. So SaaS metrics are always a thing. Revenue forecasting, always a very popular topic. Like how do you accurately forecast your revenue, subscription revenue usage, revenue services, etc. You know, the, the, the SAS P and L is always a popular post on LinkedIn. The proper format of the SAS P and L always gets a lot of interest, but also because you can take so much from a properly formatted SAS P and L. And like tax, very important. People don’t like to talk about tax compliance, but it’s like, you know, again, you know, there are always some, some popular topics. Plus templates are always popular.

[00:27:02.190] – Joran

Yeah. Therefore we get a lot of engagement regarding benchmarking. Like I know a lot of people of course are on LinkedIn, they’re following people and then they see, hey, how we grow from 0 to 10, whatever the number is in X amount of months. How would you recommend that people look at benchmarking? So not just looking at the posts on LinkedIn with the success stories and how should they compare themselves?

[00:27:27.000] – Ben Murray

Yeah, so I always say aggregate SaaS benchmarks are dangerous to your health. So you know, we see all these reports out there where they’re just like, hey, CAC payback should be this or your attention should be that. Those reports are great eye candy. But When I benchmark SaaS companies, I do it two ways. It’s limited to data sets. The metrics can only go so far. I use benchmark AI and Ray Reich’s data. But if you get enough Big enough data set. I like to benchmark by acv. So what’s your average price point? If I’m selling a $10 product versus a $500,000 product, they’re much different expectations for my benchmarks and efficiency. Also ARR size like our OPEX profile. How much are we spending in R and D as a percent of revenue? That’s going to be much different when you’re 1 million ARR versus 30 million ARR. My five pillar metrics framework, the benchmarks I put in there are ac, some are ACV specific and some are ARR specific. Then we can really benchmark our business appropriately. Because I don’t like those posts that say hey, you’re doing great if your CAC payback is less than 12 months or your retention needs to be at least 110%.

[00:28:32.580] – Ben Murray

That’s not the case in B2C or a small price point B2B. You have to be careful with what people say or what benchmarks they’re using or if they publish their numbers. Right. They’ve got to be very relevant specific to you to make use of it.

[00:28:47.010] – Joran

Yeah. So kind of know the, the background of the numbers before even I guess like yeah, trying to look at them. Were we look ahead like what is the biggest risk or opportunity within finance or SaaS finance strategy that founders should prepare for in 2025 or beyond?

[00:29:05.730] – Ben Murray

Yeah, I think one of course financial management. But the big thing is, you know, revenue models are changing, pricing models are changing. You know, we’ve got usage, outcome based, value based depending on our business, maybe that doesn’t matter. The talk is just staying with the revenue models, the pricing models because that does adjust our metrics a bit and our economics. And then also, you know, it’s if we are an incumbent and we have, you know, traditional SaaS, can we survive a competitive threat against an AI first competitor, you know, who may have a different cost structure, different pricing model that could be, you know, one fifth of your price. Thinking about the changing business models, you know, because we think back in the 90s and on premise and we moved to cloud and some software companies didn’t make a great transition to cloud and were bought by others. Now we’re in this different stage of, you know, all right, traditional SaaS but now AI first SaaS and you know, how is that evolving? Does that impact us at all? You know, and how is our pricing model evolving? Does that have to change and impact our metrics?

[00:30:06.880] – Ben Murray

So a lot going on within SaaS and just the evolving pricing model because I think, you know, Salesforce had the big splash of agent force and outcome based pricing, but really it’s, it’s almost usage based. Is it truly outcome? Not sure. I think it’s staying tuned in to what’s happening on that front to make sure we’re not surprised by new people coming in that have a, just a pricing model that could really shake us up.

[00:30:34.900] – Joran

Yeah. Yeah. Nice. I’m gonna probably ask the impossible from you. You mentioned you write so much about SaaS financing that we’re trying to do it in 40 minutes. I’m gonna ask you to give your best advice for SaaS founders right now within two sentences. Like what would you tell them?

[00:30:54.170] – Ben Murray

Yeah, know your numbers and financial discipline never goes out of style.

[00:30:58.970] – Joran

Love it. Getting back to the foundation, if we talk about growing a B2B SaaS in general, like what kind of advice would you have for SaaS fund who’s just starting out and growing to 10k money, recurring revenue?

[00:31:12.890] – Ben Murray

Yeah. If you’re just starting out again, one is good clean accounting. Have a good accounting foundation. Make sure you close your books on time. Have a bookkeeper, you know, if you’re doing it, or a bookkeeper who knows the SaaS business model. So one just good financial statements. That’s what you need. That, that early cash, knowing your cash and then also just a really, really basic forecast just to kind of stay ahead of things. So under 10k or growing to 10k or 0 to 10k mrr, it really is just, all right, let’s have accounting place. Let’s make sure that’s clean, you know, so you can focus on building your product, figuring out, you know, product market fit, all that stuff.

[00:31:50.230] – Joran

Yeah. Nice. And we’re going to make a huge step. So we’re going to go, we’re going to assume that we plus 10k. Mr. And we’re going to grow towards 10 million. ARR. What kind of advice would you give SaaS founders here?

[00:32:01.990] – Ben Murray

If you’re nearing or past 10 million ARR fast or near there, you should have my five pillar SaaS metrics framework implemented. You’ll need that data to scale your business and also if you’re going to go through any due diligence. So I would say that’s expected about 10 million or grow into 10. That would be my expectation. I talked to a founder who was under 2 million and already had implemented a lot of my SaaS metrics framework which was impressive. And I told them like, you’re ahead of 99% of the founders out there now. He took My course. So he knew what to do. But at 10, you’ve got. You do need to put some financial framework in place.

[00:32:37.650] – Joran

Okay, cool. Let’s make the plug even bigger. I guess people now think like, okay, I want to get that course, I want to get ahead. How much would you charge for the course? And can people just really do it by themselves like the guy you just spoke to?

[00:32:51.280] – Ben Murray

Yeah, definitely. I’ve got free content on my blog, so thethesascfo.com so you can start there. Tons of free content templates. Some things you don’t know that you didn’t know about, that maybe it’s not relevant now, but it will become relevant. So ton of content for SaaS operators there. Then I have my academy at the THC, sasacademy.com and again, same thing there. Free and paid. Free content and courses that start at a couple hundred bucks, up to 2,000 depending on where you want to take your training.

[00:33:20.240] – Joran

Yeah, yeah. But in the end, it’s money well spent. If you know your numbers and you can actually know what drives revenue, then.

[00:33:25.650] – Ben Murray

It can easily be quick roi.

[00:33:28.690] – Joran

Yeah, exactly. Nice. Well, let’s. Let’s see if I can try to summarize. So we started off with cash is king, but it doesn’t say how the business is actually operating. Don’t ignore finances at the beginning. It starts with clear data. When we look at your five pillar SaaS metrics, it’s growth, retention, margins, financial profile and efficiency. If we revenue, get bookkeeping in place, after that, get a proper SaaS P&L in place and check of course, customer revenue data, HR data and other data. Start forecasting and benchmark yourself against others. Benchmarking. Aggregated benchmarks are bad for your health, so do it by ACV and AR size. Have a financial finance champion, fractional. You can have one when you’re around 3 million AOR. But hire a CFO above 10 million ARR. Close the books on time. Don’t make things too complicated. Make sure you know your cost to deliver revenue. Debt is a great way to not give up equity, but know your numbers before taking it. And then I guess when we’re coming to the end, 10k mortgage, clean bookkeeping, financial statements, focus on cash. And then when you’re going towards 10 million AR, get the course from Ben and check out the 5 billion metric framework.

[00:34:44.190] – Ben Murray

Yeah. Great job.

[00:34:45.790] – Joran

Nice. We’re gonna link to all the templates, to the blog newsletter, to the podcast academy, everything you mentioned. Anything else before we jump off in 40 minutes?

[00:34:55.800] – Ben Murray

We covered a ton this is what I’ve learned over 25 years in finance and accounting. It’s baby steps. There’s a journey here and, you know, again, I’ve got those resources, I’ve got my sites. But again, if anybody has any questions or you’re just so confused on where to start, just email me benthascfo.com and always happy to point you in the right direction.

[00:35:13.470] – Joran

Yeah, we’re going to also link towards your LinkedIn profile, but I can imagine that you can’t accept any more new connections or have you not hit the limit yet?

[00:35:22.740] – Ben Murray

I haven’t, but I listened to another podcast that talked about that, so I’m more aware of the connection limit.

[00:35:29.500] – Joran

Yeah, because I think you can still only have 25. And what is it now? You’re 40,000 followers? 50.

[00:35:35.360] – Ben Murray

I have 28,000 followers, but not as many connections do we need to be selective. So email.

[00:35:40.580] – Joran

Ben, thanks for coming on. For people listening on Spotify, leave us a review if you haven’t. It helps us to rank higher, beat the algorithms. And we’re going to add a poll towards the. Towards that podcast. So always happy to hear what you thought of it. Thanks again, Ben, for coming on.

[00:35:56.020] – Ben Murray

Yeah, thanks for having me. Enjoyed it.