The Modern CFO: How to Win in a Competitive Business Environment

The Modern CFO’s Role in Managing Complex Revenue Models

Today’s business environment, affected by increased competition, changing buyer psychology, and economic uncertainty, has made it increasingly difficult for companies to sell software. As this new era unfolds, CFOs are recognizing that their conventional revenue models may no longer suffice for maintaining strong revenue growth. In order to meet revenue targets, B2B companies are increasingly embracing hybrid pricing models and diversifying their revenue streams.

Pricing options range from traditional monthly subscriptions to usage-based models, with many companies adopting a combination of both to offer flexibility to customers while ensuring steady recurring revenue to mitigate risk. Additionally, some companies offer subscriptions directly on their websites to small and medium-sized businesses (SMBs), while their sales representatives negotiate deals with enterprise customers. Simultaneously, an increasing number of companies are incorporating partners into the mix, acquiring customers through referrals.

The New CFO Practices for Success

Diversify Your Revenue

B2B software has historically relied on sales-led revenue models for growth. This means sales representatives reach out to potential customers, negotiate pricing and terms, and close deals. As economic instability continues, companies are looking for ways to reduce expenses, and many marketing and sales budgets have been drastically slashed. This shift has forced companies to find different ways to acquire new customers.

Product-led growth and partner-led growth are the two most common revenue models added to B2B go-to-market strategies. In a product-led growth strategy, companies allow their customers to sign up directly from their websites, without involving sales personnel. Often, companies offer free trials to customers with the hope that they will upgrade to a paid subscription in the future. Partner-led growth involves companies taking advantage of the tech ecosystem by utilizing resellers and referral partners to attract new customers. Each customer a partner brings on will earn them a commission, resulting in a win-win situation for both parties.

Companies operating in the B2B tech space need to reevaluate their exciting revenue models, and diversify into new go-to-market strategies to keep up with competition.

Experiment with Pricing and Packaging

SaaS solutions are flooding the market as technological advancements continue. Buyers are getting bombarded with new solutions, causing buyer fatigue. As customers become increasingly difficult to sell to, buyer leverage is stronger than it’s ever been.

In today’s competitive environment, buyers are demanding flexibility in pricing, and each buyer tends to have their own set of requirements. Pricing demands vary from flat-rate subscriptions where buyers know exactly how much they will spend each billing cycle, to usage-based models where customers are charged according to their activity level, which can vary from cycle to cycle.

Some companies prefer not to pay for a SaaS contract upfront and frequently demand a usage-based model that mitigates under-utilization risk.

The newest pricing model on the market is hybrid models, incorporating both subscription fees and a usage-based model.

As an example, let’s take Mailchimp, an email marketing company. Mailchimp has a hybrid pricing model, with a combination of subscription-based pricing and usage-based pricing. There are a number of subscription plans available, each with different limits (number of emails sent, number of users, etc.) and each is priced on a subscription basis. However, if the customer’s usage rate exceeds the plan’s limit, they are required to pay an overage for the additional data used.

Some companies are using this pricing shift as an opportunity to rethink their pricing models, and create more fitting pricing packages and approaches for different parts of their customer base. Hybrid pricing models, and flexible packaging options are no longer just a fad, they have become a necessity in a market where companies need to be much sharper on both product and commercialization.

Automate Billing and Revenue Management

Billing and revenue management have become much more challenging in this new environment. First, hybrid or usage-based pricing can present many difficulties since prices vary considerably from customer to customer and from billing cycle to billing cycle. In addition, usage data must be tracked and calculated according to each customer’s specific pricing logic before an invoice can be generated.

Secondly, the emergence of bespoke, negotiation-based customer contracts has made billing for each customer different. Each contract has its own terms, billing and pricing logic, making a repeatable or scalable process even more challenging.

Manual processes or legacy billing systems are not built to deal with this type of billing and pricing complexity, making modern billing automation systems essential for today’s B2B companies. Having a flexible system capable of adapting to complex pricing structures and bespoke contracts will prove invaluable for managing complex billing at scale, maintaining a healthy cash cycle, preventing revenue leakage, and improving overall operational efficiency.

Utilize Analytics

The complexities of a mixed-channel GTM environment make analytics that much more crucial. When managing multiple different revenue models, the opportunity cost of a dollar spent is rising. This makes it challenging for companies to decide where to spend it, whether it be a customer, a self-serve sign-up page or a distribution partner.

Measuring channel performance and optimizing the distribution of financial resources becomes a key component for B2B companies with multiple revenue streams, especially in an uncertain economy where cost cutting is the reality of most tech companies.

For example, if partner-led growth works best, sales and marketing budgets may need to be trimmed. But if sales-led growth is the winner, it’s probably time to boost sales budgets and scale back on partnerships.

Analytics are also becoming increasingly crucial as the role of the CFO continues to evolve. While in the past CFOs were mainly considered number crunchers, as time progresses it is becoming more and more evident that they play a much more crucial role in making business decisions, steering the organization towards strategic growth.

Today’s CFOs are breaking out of traditional operational responsibilities and becoming strategic allies, helping shape the company’s business strategy and growth trajectory. Having visibility into the company’s financial performance and being able to identify trends, and opportunities for growth helps CFOs see the big picture and work with the CEO to drive operational and strategic transformations.

Billing Automation in 2024
Based on the information discussed thus far, it’s no surprise that B2B tech companies are turning to modern billing and revenue management platforms like Received. Switching to a next-gen billing system has become a necessity in the competitive modern environment, as legacy systems no longer meet the complex requirements of today’s go-to-market strategies and pricing structures.

The Received Difference

Received is the first B2B-specific Billing & Revenue Management platform, made for modern B2B finance teams managing multiple revenue streams, custom contracts and complex pricing models, looking to streamline operations and gear up for growth.

Why B2B finance teams choose Received:

• Built for complex B2B pricing structures and contracts.
• Supports all B2B revenue streams: sales-led, self-serve, and partner-led.
• Automated reconciliation and revenue recognition.
• One dashboard for billing and revenue data.
• Scalable platform to support growth.
• No engineering is required at any stage.

Click here to find out what CFOs and VPs of finance from leading tech companies have to say about upgrading their billing platform, and how it contributed to business growth.