Words matter. And highly functioning leaders know it.

I’m not talking about mission statements, lists of “things we know to be true,” or other motivational sayings like “a journey of a thousand miles begins with the first step.”

I’m talking about finance. Money. Without it, you can’t build products that delight customers. You can’t help your customers or your employees see how great your company will be in the coming years.

Finance is strategic. If you are outsourcing your bookkeeping or simply hiring a head of finance to “count the beans,” you are doing it wrong. You can’t ignore your financials and figure out where you are winning. You can’t ignore your financials and justify your pricing. You can’t ignore your financials and decide who and where to hire.

Here is a starting point (primarily focused on SaaS/Software companies).

Bookings

• When do bookings become revenue?
• How do we report and measure multi-year contracts?
• How do bookings targets compare to revenue targets?

Revenue

• When do you recognize?
• How long does it take for revenue to become cash in the door?
• Is it recurring?
• Why is it so different from our bookings number?

Recurring Revenue

• How do we handle usage-based revenue models?

Services Revenue

• What are services vs. recurring revenue?
• Is services revenue growth a strategic or financial goal?

Gross Profits/Margin

• Is our cost structure too high?
• Is our pricing too low?
• Is our pricing consistent?
• What is our gross margin for ARR?
• What is our gross margin for services?

In addition to reviewing your OKRs, make sure your leadership team knows these numbers every month. And be sure that you have an agreed upon definition for everything.

Bring finance numbers into your business analytics. You’ll execute better.