Cash flow management is one of the most important aspects of any B2B SaaS business that wants to grow sustainably.
No wonder, nearly 92% of companies have created a cash flow forecast.
However, maintaining a positive cash flow is no mean deal.
Fret not—because in this article, you’re going to learn handy tips for managing cash flow in your B2B SaaS business.
Let’s get started.
1. Invoice Regularly
When thinking of improving cash flow, you might not factor in your billing system immediately. You’ll probably prioritize your marketing and customer success strategies.
However, one of the most effective ways to improve cash flow in B2B SaaS is to invoice your customers regularly.
But this is always not easy to accomplish if you’re doing it manually, especially if you have tons of customers to bill.
This is where leveraging a subscription management software solution like Younium becomes helpful.
The beauty of using automated billing is that it enables you to send out digital invoices at the same time within the specified time.
Besides, with automated billing, you reduce late payments, improve customer satisfaction; generate consistent and timely payments which ultimately helps to improve cash flow.
Alternatively, consider invoice factoring or factoring government receivables to improve cash flow. By selling your unpaid invoices to factoring companies, you ensure timely cash flow and enable SaaS businesses to focus on growth.
2. Set Up Recurring Payments
One of the easiest techniques to plan around your B2B SaaS business’ cash flow is to set up and automate recurring customer payments.
With recurring payments, your customers are charged automatically on a set schedule either to their credit, debit cards, or bank account.
Setting up recurring payments can be beneficial for your business in many ways including:
- Improved convenience for customers
- Eliminate late or missed payments
- Reduces administrative headaches and saves time
- Stabilizes your cash flow
To set up recurring customer payments you can use your accounting software using the following steps:
- Use your account software to set up your recurring payments
- Let customers authorize how to be charged—whether through their credit or debit cards
- Schedule payments for the same time each month
Note that setting up recurring payments using your accounting software can have some limitations.
This is where the use of recurring billing software becomes handy.
With a recurring billing system, you can send out recurring invoices to your customers automatically on a set schedule like monthly or yearly. Here are some of the best recurring billing software solutions listed by Attrock.
3. Prioritize Customer Retention
Having a solid customer retention management strategy is the key to improving cash flow for your B2B SaaS business.
Because when you delight your customers after they subscribe to your software product, they will continue to use it for as long as they need to.
That means that your business will have reliable cash flow.
But how do you retain B2B SaaS customers given the plethora of options they have out there?
Here are powerful B2B SaaS customer retention strategies to use:
- Prioritize onboarding
- Keep your product updated
- Consider a rewards program
- Decrease involuntary churn
- Deliver exceptional customer support
- Optimize your pricing to improve retention
- Personalize your product offerings
- Create a seamless billing experience
4. Minimize Customer Churn
To improve cash flow in your B2B SaaS business, you not only need a steady stream of customers but you also have to ensure you’re meeting the needs of your customers.
However, in the B2B SaaS industry, customer churn is unavoidable given the plenty of options customers have out there.
Having a higher churn rate can severely affect your company’s bottom line by diminishing your cash flow.
Because when customers cancel their subscriptions, you lose them and your monthly revenue goes down. This can hinder your business growth.
Thus, you need to keep your customers happy and help them achieve their goals when using your product.
Here are guaranteed ways to lower SaaS customer churn:
- Find out why customers are churning
- Track everything
- Collect feedback from customers
- Optimize your onboarding process
- Make improvements before increasing your sales and marketing expenses
- Spot and target at-risk customers
- Deliver outstanding customer support
- Offer annual subscription deals
- Reward loyal customers
5. Build Cash Flow Forecasts
Cash flow forecasting is a powerful cash flow management tool that can help to accelerate growth for your B2B SaaS business.
- It enables you to plan for cash gaps and surpluses in advance
- Helps you determine how much money your business has, could, and should have as well as what you can do with the money
- Helps you figure out potential shortfalls before they happen enabling you to identify areas to reduce spending
- Helps you strategize around certain bill payments without hurting customer relationships
Here are the best practices for accurate SaaS cash flow forecasts:
- Understand your cash inflows and outflows
- Leverage software that simplifies cash flow forecasting
- Leverage accurate data
- Try new pricing techniques
- Categorize expenses in your budget
- Build cash flow forecasts when your SaaS is brand new
Pro tip: Want to start a B2B SaaS business but you can’t figure out how to maneuver around the process? Try one of the business formation services listed in this post by SmallBusinessHQ.
Improving SaaS cash flow is a great idea if you want to achieve sustainable growth for your business.
So as you create effective lead generation strategies, you should also focus on customer retention, reduce customer churn, and build cash flow forecasts.