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What is the most effective financial model template for B2B SaaS start-ups?

Vanessa Kruze, CPA, is a leading expert in startup taxes and tax compliance. Her team at Kruze Consulting has filed thousands of tax returns for companies that have raised billions in VC funding, and her work has been diligenced by leading VCs, attorneys, and M&A teams at the largest technology companies.
Vanessa Kruze, a highly-experienced CPA, brings valuable tax expertise to startups, drawing from her rich background at Deloitte Tax and as a financial controller for a $20 million startup. As the leader of Kruze Consulting, recognized multiple times in the Inc 5000 list, she specializes in navigating the complex tax landscape for startups. Her firm is known for delivering precise and strategic tax solutions, delivering tax credits utilizing advanced tools to ensure compliance and optimize tax benefits for startups throughout the United States.

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I’m a CPA and interim CFO for 800+ startups and my team has advised many  companies on building SaaS financial models that have gotten the thumbs up from top VC firms and the pickiest of investors/board members. B2B SaaS businesses generally aren’t the hardest companies to create projections for, although there are some nuances around revenue that need to be carefully modeled.

We have several free templates available on our financial model page, including one for a SaaS business. It’s always a great idea to start with a template so you don’t have to worry about making sure the formulas tie and the balance sheet balances. 

Revenue - the most important part of B2B SaaS modeling

Getting your revenue right is the most important item for most B2B SaaS financial models. The recurring nature of SaaS revenue often requires a different approach to modeling compared to traditional businesses. Below, I’ll delve into two solid ways to model SaaS revenue for an enterprise-focused business: sales pipeline modeling and traditional customer projection modeling.


Sales pipeline modeling is a powerful approach to revenue modeling, especially in the context of enterprise sales where the sales cycle can be long and complex. This is the best template / structure to use for companies that have a real pipeline. It’s very helpful if the business is using a CRM where the prospect data can be stored, and updated via reports. Here’s how you can build a sales pipeline revenue model:

Step 1: Define Sales Stages

Begin by defining the stages of your sales process. Typical stages could include Lead, Initial Contact, Qualification, Proposal, Negotiation, and Closing. Each stage should represent a step in the customer journey towards a sale.

Step 2: Assign Conversion Rates

Next, assign a conversion rate to each stage of the sales process, representing the percentage of prospects that move from one stage to the next. These rates can be based on historical data or industry averages. If this step is going to be really hard for you to do, based on your stage, it might make sense to use the traditional B2B SaaS customer modeling method below.

Step 3: Model Prospects

Model the number of new prospects entering your sales pipeline each month. These prospects will flow through your sales pipeline according to the conversion rates assigned to each stage. Base this on your current run rate, sales headcount and projected sales hiring/ramp period.

Step 4: Determine Sales Cycle Duration

Determine the average duration of your sales cycle. This is important for timing your revenue recognition. Again, if you don’t have this, use the customer modeling method below.

Step 5: Average Contract Value (ACV)

For existing customers, and near-term prospects, use the CRM average contract value - ACV - of your deals. For later time periods, outside of where you can easily project from your CRM pipeline, use an estimated ACV. This should include all recurring revenue but exclude one-time charges and professional services.

Step 6: Recognize Revenue

Recognize the revenue over the appropriate time frame, by taking the ACV and dividing it over the length of the contract. We recommend a table with the clients listed down the rows. The columns should have the contract details, like ACV, start date, etc., then the months where you recognize each months’ revenue.

Step 7: Add Up the Recognized Revenue

Finally, add up the recognized revenue at the bottom of your table. 


Traditional customer projection modeling, also known as cohort modeling, is another common approach for modeling SaaS revenue. This model focuses on the lifecycle of customers. You’ll have starting customers, new customers, churn and ending customers for each cohort - usually a month at the most basic level. Here’s how to build a traditional customer projection revenue model:

Step 1: Define Starting Customers

Start by determining the number of existing customers at the beginning of your forecast period. This is the number of customers at the ending of the previous period. For a new startup, this is zero.

Step 2: Forecast New Customers

Project the number of new customers you expect to acquire each month. This could be based on historical growth rates or specific marketing and sales initiatives.

Step 3: Consider Churn

Estimate your monthly churn rate - the percentage of customers that cancel their subscriptions. Deduct churned customers from your total customers for each period.

Step 4: Determine Revenue per Customer

Estimate the average monthly revenue per customer. This should take into account your pricing strategy and the mix of plans that customers choose.

Step 5: Calculate Revenue

Calculate revenue for each period by multiplying the number of customers (beginning customers plus new customers minus churned customers) by the average revenue per customer.

With this method of B2B SaaS revenue modeling, you can have separate lines for different products that have different pricing. For example, small, medium and large plans.

Here are some common points that you’ll want to include in your financial model:

  • 3 Years of Projections. Occasionally investors will ask for more/less, but start with 3 years.

  • 3 Statement Model. Include a Profit & Loss Statement, Balance Sheet, and Statement of Cash Flows. Each should balance and tie back to each other (this gets tricky).

  • Your KPI’s should be your Drivers. Every company has a dashboard of metrics that they track growth and success by. A few examples include number of users, customers, margin, customer acquisition cost, Twitter followers, website traffic, etc. Look to the past and show that there is a correlation between X (could be # of Sales Reps) and Y (could be your revenue), then use this as a driver towards the future projections.

  • Churn. Customers will leave. Account for this.

Don’t show an investor a financial model that shows smooth growth “up and to the right.” No company’s growth is without bumps. These models take a lot of time to build and are highly personalized, so it really is best to consult with a professional. If you’re planning on raising $3M+ you should come prepared with a well thought out financial model.

At Kruze, we are SaaS accounting experts. From revenue recognition, to SaaS b2b financial projections, to fundraising, we know subscription startups. Reach out to us if you are looking to upgrade to a CPA firm focused on tech startups and SaaS businesses! 


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