Evolving Revenue Models: Key Insights from the Strategic CFO Forum

Businesses today - across a variety of industry segments - are moving to diversify business models, optimize partner revenue share, and keep pace with evolving market and customer expectations. However, many organizations are trying to do this with outdated or inefficient revenue management systems. And the repercussions to the business are many: missed monetization opportunities, unstable partner relationships, revenue leakage, and lagging revenue models. 

This is what I heard first-hand from leading CFOs at the recent Strategic CFO Forum at the NASDAQ in New York. This is one of the best parts of my job, meeting like-minded people and having open discussions about the challenges of monetization, revenue, and business growth.

Here are my key takeaways from this wide-ranging discussion on the revolutions occurring in recurring revenue and the systems and best practices that can help organizations like yours stay ahead. 

Optimizing Billing and Monetization

To keep pace with evolving customer needs and opportunities, many businesses have changed their models from “one size fits all” offerings to flexible subscription and hybrid business models. But they’ve found that the opportunity within subscription and hybrid models can be slowed or even lost because of challenges like:

• The inability of existing systems to manage updated revenue models 
• Pricing accuracy and consistency
• Accounting and finance team efficiencies

Attendees at the forum widely acknowledged that automation of financial processes is necessary to realize the revenue potential of new business models and to minimize revenue leakage that results from the inability to accurately bill for these updated models. Many participants noted that their legacy billing systems make it extremely difficult to support modern revenue streams or integrate with multiple systems and business models that came with an acquisition. 

Discussions revolved around how finance teams are mired in outdated and manual tasks because their systems are unable to support modern revenue strategies. This introduces untold inefficiencies, errors, and lost revenue, extends cash collection times, and damages employee job satisfaction.

Beyond the accounts receivable complexity, these legacy, custom, and inefficient billing systems are barriers to stable revenue, modern productization, and overall organizational growth and stability. 

Optimizing Partner Revenue Share

Partners are critical to growth, though as we discussed at the Strategic CFO Forum, partner management, and optimization is a long-simmering challenge compounded by complex revenue and product models. 

Highlighted challenges across industries with respect to partner optimization include:

• Revenue share predictability and forecasting
• Real-time tracking of partner contributions
• Ability to support flexible revenue share models
• The potential to leverage and capitalize on indirect business models

Discussion centered around the strategic importance of optimizing partner revenue share, particularly in industries with complex collaborator ecosystems. The untold number of partner strategy options and business models speaks to the need for a flexible and agile billing solution designed to enable customized partner relationships. 

Adherence to Revenue Recognition Standards

The complexity around compliance with revenue recognition standards is a well-known challenge. The roundtable discussion emphasized the critical need and implications of compliance with evolving revenue standards including ASC 606, IFRS 15, and ASC 842.

I heard universal agreement on the importance of automation in easing the challenges of regulatory compliance. We had a deep discussion about how billing automation not only enables compliance but empowers organizations to make informed and confident strategic decisions. 

We also discussed the opportunity to leverage the increased aggregation of data - from a variety of disparate sources - to create new products and bills of materials.  Attendees agreed that the need exists to split out revenue items by period, to ensure compliance. 

Across the board, participants stressed the value of real-time insights to enable finance teams to analyze revenue streams, identify product and revenue trends, and generate comprehensive financial reports for stakeholders.  

Challenges, Best Practices, and Moving Forward

Admittedly, the challenges with billing automation implementation, initial costs, employee training and willingness to change, and integration complexities must be solved.

While there is no one-size-fits-all solution for these challenges, in my work with customers across industries, I’ve found that three core best practices can help – phased implementation, robust change management, and continuous monitoring.  

In conclusion, this roundtable discussion underscored why automating complex billing, efficient partner revenue share, and adhering to revenue recognition standards are integral to fostering financial efficiency, transparency, and strategic decision-making within modern organizations. 

The consensus among participants was that embracing billing and revenue automation is a competitive advantage and strategic imperative for sustained growth. 

If you’re a like-minded CFO, I’d welcome a conversation about what RecVue might be able to do for you and your organization.  Please feel free to reach out at info@recvue.com to continue the conversation.