The Rule of Four: Consider These Four Benefits to Automating Revenue Recognition Now
We’ve mentioned some pretty significant changes bringing revenue recognition to top-of-mind status for most all CFOs and Controllers spanning industries worldwide.
Revenue accounting has always been complex, but ASC 606 ratcheted that up by a factor of 10. Today’s evolved business landscape and variety of modeling options available create challenges best overcome through the implementation of a robust revenue accounting automation tool.
While you’re chewing on that, consider these key benefits to revenue recognition automation:
1. Scale at speed versus stagnancy
Organizations that rely on outdated technology and systems for the most critical piece of the quote-to-cash cycle - revenue - are missing some of the most essential concepts of a revenue management system. Concepts including, but not limited to:
- Fair value or relative selling price
- Arrangement linking/grouping
- Revenue allocation
- Revenue specific reporting
- Complex deferred revenue management
- Revenue forecasting
Amid the current business landscape of high customer standards and complex business models, companies are struggling to implement the necessary big-ticket changes and establish necessary policies which accurately account for revenue and produce the detailed documentation and analysis to validate the figures reported. The evolution of the digital business model requires the agility to handle complexities including:
- Leveraged pricing strategies that maximize customer value beyond quantity, product and price
- New product and pricing package launches quickly and with ease
- Customer billing based on usage
- Ability to offer flexible payment gateways, regardless of currency and medium
- Deftness to handle billing friction, revenue leakage and customized billing solutions
2. High-performance automated workflow versus redundant, error-prone manual processes
Companies which choose a modern monetization platform built around a consistent and transparent revenue automation engine will see improved accountability and control while reducing bottlenecks and duplication of effort.
Naysaying financial leaders may view automation technology as added effort and expense, when, in reality, automation can help reduce staff needs and expenditures. Cost savings are directly realized via reduced resourcing, infrastructure and auditing fees and indirectly through improved performance from consistent data and rule-making efficiency.
In fact, with the right automation platform put to use, a company will be able to re-create and improve upon those traditional, yet mundane, tasks associated with monthly and quarterly close processes, freeing up the formerly bogged-down staff to redirect their focus to higher value-added analysis and decision-making.
3. Unleash the power of data for insights and analytics versus data silos
By relying on the technology available via a modern revenue automation solution, your organization not only has the ability to recognize revenue for both old and new rule sets, but to also supply audits and reports with ease and confidence.
Automated business processes and controls are repeatable and auditable, resulting in a smoother, faster, less costly and more accurate audit preparation process and transaction trail. Probably the only folks who aren’t fans of automation are the auditors themselves, given the reduced chargeable time needed for their services.
In comparison, those relying on data forthcoming from an ERP system will find those solutions weren’t designed to do anything beyond supplying the most basic of data sets to a revenue team. Report offerings built for invoicing and other standard financial system activities aren’t robust enough to capture revenue-based processes which depend on number-crunching outside the bounds of an ERP system.
4. Compliance efficiency versus risks of severe nature
The emerging technologies which have helped usher in our current age of digital transformation and the recently released revenue guidance overhaul, ASC 606, have only served to accentuate the idea that revenue recognition rules can be properly served by manual spreadsheets and ERPs. Organizations limiting themselves to ERP-based revenue recognition and anything approaching manual processing risk audit issues and critical reporting errors, which could ultimately result in a restatement.
In order to bring your company into compliance with ASC 606 and its five-step model for recognizing revenue with your customer contracts, take advantage of the fingertip access to all your company’s critical data sets made possible by modern financial management solutions.
Automation technologies can revolutionize that frenetic, deadline-driven close process often known as ‘the last mile’ for your company. During this critical time, accounting and finance teams must quickly close their books by consolidating data from a variety of systems and ledgers, reconciling high-risk accounts, recording adjustments and creating financial statements. Unfortunately, according to this Deloitte survey, large chunks of that time traditionally have been inefficiently utilized. More leading companies today, however, are implementing financial close software which automates all those last-mile activities to help both reduce errors and improve process efficiency.
Just the thought of a restatement is enough to keep a CFO awake at night, yet many large enterprises still rely on error-ridden manual data entry into spreadsheets.
Replacing the inefficient and dangerous manual data entry with automated data validation and collection offers the opportunity to take advantage of modern analytic capabilities previously unavailable. The more data at our fingertips these days equals better opportunity to build a company’s efficiency and reduce precious time to close.
You have the tools at your disposal to ensure your company’s reporting is streamlined, accurate, on time and cost-effective.
Contact us today to learn how RecVue’s order-to-cash solutions can help your organization meet these achievable goals for a more productive present and reliable future.