Business-to-business (B2B) go-to-market (GTM) strategies are changing dramatically in the software-as-a-service (SaaS) world and is directly impacting the CFO, finance teams, and organizations in ways that have yet to fully manifest. Following a flood of venture funding in the past decade, especially during the COVID-19 era, the market has become more competitive than ever. Organizations need to launch new products and services faster, and recent recessionary pressures are affecting buyer psychology, business models, and pricing. Yesterday’s sales and marketing tactics are facing major challenges, accelerating the evolution of B2B GTM strategies.
There are three main B2B revenue streams:
- Sales-led is the traditional high-touch approach, where sales teams move the buyer along the sales process.
- Product-led sales offer buyers a self-service experience — at least at the start — where customers buy, onboard, and learn the product for themselves.
- Partner-led is where partners help your company reach or sell customers, such as referral, reseller, and other partner models.
A decade ago, sales-led reigned supreme, but this has rapidly changed in recent years. Product-led growth entered in the late 2010’s and, as of late, we have seen a growing momentum for partner-led growth.
In a recessionary environment, there is growing pressure on sales and marketing to find more capital-efficient GTM strategies, impacting buyer psychology, changing business models, and pricing. Online advertising has become more expensive, and email marketing campaigns don’t work as well as they used to. GTM strategies are becoming increasingly hybrid, with mixed channels activated early on in a company’s growth journey.
The Impact on the CFO
Finance teams continue to be more integrated with business teams. As sales and marketing change, finance team language, systems, and processes naturally evolve hand-in-hand. The whole revenue management process, including quote-to-cash, billing, and revenue recognition looks different between sales-led, product-led, and partner-led approaches.
As mixed revenue streams become the norm, finance teams will have to adapt their processes, skills, and tech stack.
Here are five areas where CFOs and their finance teams need to adapt and rethink internal processes to enhance their GTM strategy.
1. Billing is a Data Issue
Calculating billable events used to be straight forward, but mixed revenue streams and complex pricing make things much more challenging.
Usage pricing adds a heavier data element into the billing process. There is a challenge in sales-led and partner-led channels, where contract variance makes each enterprise and partner contract a unique snowflake, making a repeatable or scalable process incrementally challenging. Finance teams should specifically look for consumption data ingestion. While a consistent data format is a better option, finance teams cannot always dictate what data formats will look like. If not carefully planned, this can create real operations and analytics problems.
2. Invoicing Needs Advance Planning
Sales-led invoicing used to be easy in the old SaaS world, but has yielded to increasing complexity. But invoicing across channels means invoices need to be configured and delivered differently. For example, billing a reseller partner could vary, as some resellers want their invoice to include the end customers, whereas some prefer product line items. Another challenge is invoicing in the age of usage pricing — some enterprise buyers would like to get a CSV file with the usage data, which creates a huge operational burden on finance teams.
Finance teams should work closely with business operations to map invoicing needs and understand the implications of systems and processes — such as how data flows from business operations to finance, the accounting system, and your customers.
3. Revenue Recognition Just Got More Complex
SaaS companies have their own revenue recognition rules and dynamics. As technology companies move into mixed revenue streams, the revenue recognition process becomes more challenging. Whether it's license, usage, subscription, or services, revenue recognition logic is a challenge, and enterprise contracts and usage pricing is much harder to manage, especially at scale.
We have lately seen that mismanaging revenue recognition can hurt companies' acquisition prospects, as it casts a shadow on company representation. Finance teams should consider what complexities they have today and tomorrow and how to properly automate those.
4. Reconciliation is Becoming a Spaghetti of Workflows
Billing reconciliation is a crucial part of the process. Think for a minute about sales-led and self-serve and how those two compare between separate initiation points and how the data travels across the system. Discrepancies between issued invoices and actual transactions need to be identified and resolved. It ensures a healthy cash cycle, accuracy in financial records, and being audit-ready.
In a world with mixed revenue streams, finance teams need to focus on cross-functional collaboration with sales, partners, and IT as concrete processes with multiple stakeholders invested in its success are crucial for multi-channel reconciliation.
5. Finance’s Opportunity to Influence GTM Through Analytics
Revenue management is where sales and finance collaborate on performance and planning. In a mixed channel GTM, analytics become increasingly important, as capital allocation reigns supreme. Measuring channel performance is crucial to understanding where to invest the next dollar.
Being able to access and provide those analytics during and after the reporting period is a new task for finance teams who need to stay on top of multiple cash, billable, and revenue events across systems and processes. This visibility gives finance teams front stage as business advisers, in addition to its back-office execution responsibilities. CFOs, with more influence on strategy and business transformation, have greater influence where the business is going.
Roi Ben Daniel is founder and CEO of Received.ai, a B2B billing and revenue platform.