Six Ways Spreadsheets Are Undermining Your Recurring Revenue Business

December 24, 2017

Published by: serena

Tales of costly and embarrassing spreadsheet errors have been making the rounds for years. You may think your company is safe from troubles like this, but it’s estimated that one in five large businesses may suffer financial losses as a result of spreadsheet errors. These are not small, routine losses that can be expected as part of doing business. These are often huge losses caused simply by an extra zero, a misplaced decimal, a careless cut and paste maneuver, or a hidden row of data.

Increasingly, executives are expressing their discomfort with their companies’ reliance on spreadsheets and the inefficiencies and errors they introduce—and they’re looking for solutions. Our customers are ditching the spreadsheets in favor of a purpose-built recurring billing and revenue management solution that eliminates the hazards inherent in spreadsheets and provides a flexible, scalable, and sustainable way of operating their recurring revenue businesses. Here are six good reasons why they’re making the move away from spreadsheets.

1. Wrong tool for the job: Spreadsheets are not accounting software
Excel is a good business tool, but it lacks the purpose-built functionality that accounting software solutions deliver. And even though ERP applications are powerful, they simply weren’t designed to support the complexities of recurring revenue billing.

Recurring revenue billing has both obvious and subtle nuances that demands a specialized tool to get it right. Your organization may have different billing models, including fixed recurring fee, seat-based, usage-based (with overages and carryovers to consider), a one-time charge, and perhaps a free trial period. While other companies generate straightforward line item invoices, your billing solution must take into account challenging charges such as mid-term subscription changes, upgrades, and prorated charges.

2. Mistakes are bad for business: Spreadsheets are error-prone
We shared some sobering statistics earlier, but the dangers of relying on spreadsheets should not be underestimated. Not only can errors result in inaccurate billing and profitability data, they can erode the trust your subscribers place in your organization. If severe enough, errors may threaten your very viability by jeopardizing data integrity and even regulatory compliance.

As you work to grow your company and continue to build its reputation, a solid accounting foundation is paramount. Recurring revenue is your lifeblood, and getting it right is critical.

3. Mired in data entry: Inefficiency shrinks profitability
Spreadsheets have become the corporate cure-all. When something can’t be done in the ERP, we just create a spreadsheet for it. Untold numbers of them store vital business data and create the perfect storm of duplicate data entry and inefficiencies. Maintaining all those spreadsheets, including importing into and exporting out of various applications, takes a tremendous amount of time. Someone (or lots of someones) are entering and re-entering, copying and pasting, refreshing and updating, and checking and re-checking all those spreadsheets.

While managing your financial operations may never be easy, you can minimize the burden, improve the accuracy, and lose the inefficiencies by investing in a recurring billing and revenue management solution that is designed to work the way your recurring revenue business works.

4. Wallowing in the rows: Scale or you’ll be left behind
Your competition is increasing. The number of companies that generate revenue through subscription-based services is growing exponentially. More businesses and consumers are subscribing to services rather than buying products. Research leader Gartner reports that more than 80 percent of software vendors will change their business model to a subscription model by 2020.

These companies make an implicit (and often explicit) promise to subscribers that they are delivering the latest, most current technology to help them run their businesses better. Their innovation promise extends to their internal processes, and subscribers expect accurate billing and efficient interactions with each and every exchange.

If you are trying to grow your recurring revenue business while relying on spreadsheets to track billing, you risk being outpaced and outmaneuvered by companies that have invested in their internal technologies. They are able to quickly and efficiently scale to meet increasing demands and pivot to greet new opportunities. Using spreadsheets, you are not.

5. The risks are real: Spreadsheets can leave you vulnerable
Often, only one or two people in an organization are responsible for managing the spreadsheets used to calculate and track recurring revenue. These spreadsheets might live on an individual’s laptop and may not be included in regular corporate backups. There’s also a risk that the individual who builds, manages, and maintains the spreadsheets leaves the company—maybe on negative terms.

By moving this vital business data from risk-prone spreadsheets to a dedicated recurring billing and revenue management solution, you can help avert potential disaster by ensuring the data is safely and centrally stored and backed up with the rest of your corporate data.

6. How are we really doing? Spreadsheets are not ideal KPI trackers
Every successful company needs to understand where their revenue is coming from, where it’s being lost or leaked, and which customers and pricing models are the profitable. This type of information is exceedingly hard to come by if you’re tracking recurring revenue data in spreadsheets. In fact, you’re likely creating a dozen or more additional spreadsheets to try to uncover, analyze, and present this vital business data. More than likely you are still not getting visibility into the information you need to run your recurring revenue business.

A purpose-built recurring billing and revenue management solution is designed to deliver this information. You’ll have instant access to key performance indicators (KPIs) like monthly recurring revenue (MRR), renewal rates, churn rates, net retention rates, and customer lifetime value (CLV). Armed with data like this, your organization can make smart decisions about where and how to invest your precious resources.

Moving beyond spreadsheets
Some have called Excel the most dangerous software tool available. Considering the potential for errors, the difficulty in obtaining actionable data, and the glaring inefficiencies, this may be a fair criticism. Are you ready to move beyond spreadsheets? Talk to one of our recurring revenue specialists and learn how we can help.

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