What is finance operations, and should you build a FinOps team?

As businesses start scaling up, so do their finance operations. But it can be hard to know what falls under the purview of finance operations, and whether building a finance ops team is the right call.

This primer will seek to answer those questions. We’ll also offer some useful tips so that your FinOps strategy drives more revenue your way.

We’ll cover:

• The answer to the question, “What is finance operations?”
• What the role of financial operations is in SaaS
• An in-depth look at the benefits of building a FinOps team
• How to actually build a FinOps team
• Questions you should ask yourself before building a FinOps team

Let’s get started.

What is finance operations (FinOps)?

Finance operations (FinOps) is the beating heart of a company's financial health. It's the orchestration of processes and strategies that keep the money flowing smoothly. In essence, FinOps is about managing a company's financial resources.

FinOps professionals juggle a variety of responsibilities:

• Budgeting crafts a financial roadmap that guides spending and investment.
• Forecasting helpspredict future financial outcomes (with data, of course).
• Financial reporting creates clear, concise reports that translate financial data into actionable insights.
• Expense management gives you a watchful eye on spending to ensure it aligns with the budget and business goals.
• Revenue recognition includes accurately recording revenue to comply with regulations. The goal is to provide an accurate picture of financial performance.

If we had to be concise, we’d say the goals of FinOps revolve around:

• Optimizing financial performance: Identify opportunities to cut costs, increase revenue, and boost profitability.
• Ensuring compliance: Navigate the complex world of financial regulations and standards.
• Providing strategic financial insights: Help decision-makers understand the financial implications of their choices.

The role of FinOps in SaaS companies

SaaS companies have a unique set of financial challenges and opportunities. FinOps plays a crucial role in addressing them. Here’s a glance at why:

• Revenue management: SaaS revenue streams can be complex. Subscription billing, usage-based billing, and other models can complicate the system further. FinOps helps manage these streams, ensuring accurate revenue recognition and maximizing revenue potential.
• Cost control: In SaaS, controlling costs is key to profitability. FinOps professionals analyze spending patterns, identify cost-saving opportunities, and implement strategies to keep expenses in check.
• Cash flow management: Healthy cash flow is essential for any business but especially critical for SaaS companies. FinOps teams manage accounts receivable and payable to ensure a steady cash flow coming in and a controlled cash flow going out.
• Financial reporting and analysis: Data-driven decision-making is the name of the game in SaaS. FinOps provides accurate and timely financial reports and analyses, giving decision-makers the information they need to make strategic choices.

Why is building a FinOps team a good idea?

We’ve explained, generally, what finance operations, or FinOps is. Now we need to understand why one would build a specialized team around it.

Having a dedicated FinOps team is a strategic decision. It can greatly impact your company's financial health and overall success. Investing in a FinOps team is a smart move because they help:

Sharpen your financial accuracy

A financial operations team is your compass, guiding you toward greater accuracy and foresight. They're skilled analysts who analyze data trends to create precise revenue and expense forecasts.

These predictions empower you to make decisions with confidence, whether it's planning for expansion or navigating economic uncertainty. Their expertise in financial reporting ensures stakeholders receive clear insights into your finances.

Master the art of cost control

FinOps professionals are the guardians of your financial resources. They make sure every dollar is maximized for your company's benefit. They meticulously track expenses, leaving no room for financial surprises.

They help you get the most out of your budget by identifying areas for potential savings and better resource allocation. Their goal is to align spending with your business objectives.

Up your decision-making game

Data is the key to unlocking strategic opportunities. Your FinOps team is your data translator, converting raw financial data into actionable insights. They uncover hidden trends, assess risks, and identify growth opportunities.

They provide you with the knowledge you need to make sound business decisions. Additionally, their expertise in financial modeling allows them to anticipate challenges. Plus, they can help chart a path toward long-term success.

Guarantee you remain compliant at all times

Financial regulations are complex and constantly evolving. Your FinOps team has your back. They stay informed about the latest changes. They make sure your company remains compliant and avoids costly penalties.

FinOps teams guarantee audit readiness, providing peace of mind in the face of external scrutiny. They meticulously preserve financial records and help you adhere to best practices.

How to build a FinOps team

Building a high-performing FinOps team requires careful planning and execution. Here's a roadmap to guide you through the process:

1. Define clear roles and responsibilities

Before embarking on your talent search, defining the key roles that will make up your FinOps team is crucial. This typically includes a FinOps manager who will lead the team and oversee its strategic direction.

Financial analystswill be responsible for diving deep into financial data and analyzing trends. Revenue operations specialists will focus on managing revenue streams. They also help guarantee accurate revenue recognition.

2. Recruit skilled professionals

Look for individuals with a strong experience in finance and accounting. A knack for data analysis is a good nice-to-have. Experience in the SaaS or technology industries is a valuable asset too. Especially as these professionals will likely know the unique challenges of FinOps.

Remember,a team with varying skill sets can bring fresh ideas to the table. They ultimately enhance your FinOps capabilities.

3. Implement FinOps tools and technologies

Financial management software is essential for budgeting, forecasting, and reporting processes. Automation tools can further enhance efficiency by automating repetitive tasks. This frees up your team to focus on higher-value activities.

The right technology stack can improve data accuracy. It accelerates decision-making and drives cost savings. Think invoicing and billing management tools like Orb.

4. Establish FinOps processes and workflows

Develop standardized processes for core FinOps activities like budgeting, forecasting, and reporting. Clearly define workflows and communication channels. This fosters collaboration between the FinOps team and other departments.

By integrating FinOps into your broader business processes, you create a culture of awareness and accountability. This way, everyone understands their role in achieving broader financial goals.

5. Monitor and optimize FinOps performance

Continuous improvement is key to maintaining a high-performing FinOps team. Establish key performance indicators (KPIs) and metrics to track the team's progress.

Review these metrics regularly and use the data to refine your processes. Strive to foster a culture of continuous learning and adaptation.

Is building a FinOps team right for your SaaS business?

Deciding whether to build a FinOps team is a big step. It's a commitment, an investment in your company's financial future. Let's explore some key questions to help you make an informed decision:

• How big is your playground? A dedicated team might be overkill if your financial operations are relatively straightforward. But as your business grows and your financial landscape becomes more intricate, a specialized team can be a lifesaver.
• What stage is your growth journey at? Early-stage startups often rely on lean teams to handle finances in-house. But as your business scales, your financial needs evolve. A FinOps team can step in to manage those growing complexities.
• What financial hurdles are you facing? Do you need help to keep up with revenue recognition, cost management, or cash flow? FinOps teams can be your problem-solvers. They tackle these challenges head-on and free up resources.
• What's your financial bandwidth? Do you have the budget to hire and maintain a skilled FinOps team? If so, it could be a wise investment that pays dividends in the long run. If not, alternative solutions or a phased approach might be worth considering.

Next steps

Now that you know what a finance operations team is, remember that a key element of successful financial ops is a robust billing system.

Orb is a comprehensive billing platform designed to empower your FinOps teams. Our mission is to equip you with the tools and insights needed to unlock the full potential of your financial operations.

Here's how Orb can help improve your FinOps strategy:

• Effortless integration: Orb integrates with your existing technology stack. This includes your cloud infrastructure, CRM, and payment gateways. This allows you to effortlessly consolidate and track usage and billing data in real-time.
• Have pricing flexibility: With Orb, you gain the power to implement a wide range of pricing models. Think simple flat-rate subscriptions, usage-based, and even tiered pricing. This lets you align your billing strategy with your customers' usage patterns.
• Automation for efficiency: Orb automates the entire billing lifecycle, from invoice generation and delivery to payment collection and reconciliation. This reduces manual effort and minimizes errors. It also improves cash flow by ensuring timely billing.
• Transparency into usage: Gain granular insights into your customers' usage patterns. Orb's robust reporting and analytics capabilities help you do this. Identify trends, anomalies, and optimization opportunities, allowing you to address issues early.

Learn how Orb can help you establish a hassle-free consumption-based billing model.