Revenue Management Made Simple

Revenue Management Made Simple

Resources

by | Sep 18, 2018 | Resources

Revenue Management Made Simple

By Paul Johnson
CPA, CGMA, MBA

How to Win the Revenue Management Game

Revenue management is a top challenge for many finance professionals—especially those working in software-as-a-service (SaaS) and professional services companies. The new revenue recognition criteria, known as ASC 606, adds even greater complexity. It’s no wonder that companies are seeking to automate their revenue management processes so they can be more efficient, get more compliant, and improve visibility.

a business team of four people sitting at a table to discuss revenue management. A female with short hair leads the discussion

Design better processes

Successfully streamlining revenue management requires a two-pronged strategy, starting with better processes designed from the top down. Since revenue management is an enterprise-wide affair, these processes should be based on input from senior executives across multiple disciplines and functions.

Here’s how:

  1. Define the revenue recognition foundation, such as determining what a subscription is, what falls under “maintenance” or “support,” and what discounts you’ll permit.
  2. Establish fair value pricing criteria using market-tested parameters and centralized data.
  3. Involve auditors in these process designs and policy definitions.
  4. Use standard contracts with defined terms.
  5. Enable collaboration and information sharing across sales, service, and finance.

an older asian man working on his laptop

Invest in the right technology

Automating revenue management yields significant benefits, from faster period closes to greater accuracy and lower costs. To streamline and centralize the management of revenue accounting, businesses need technology that allows the finance team to:

  1. Connect systems. The best accounting systems connect to critical business systems within the organization, such as CRM, services management, and subscription management to create a complete ecosystem for revenue management.
  2. Automate processes. Revenue managers need the ability to codify the applicable rules through flexible templates and schedules that reflect their unique business requirements. The process must drive the automated calculation of both recognized and deferred revenue schedules and forecasts based on contract terms, subscription length, project milestones, and more—and integrate with the general ledger.
  3. Analyze the business. The best revenue management systems deliver a solid picture of both current and deferred revenue by showing a real-time snapshot of future revenues, projected renewals, and total deferred revenue months or even years into the future. You should be able to dig deep to truly understand your business, with visibility into both financial and operating data, and have the flexibility to view the business through multiple lenses to make better strategic decisions.

Master revenue management with Sage Intacct and Atlasphere Consulting

Sage Intacct automates and improves the processes associated with complex revenue recognition. Sage Intacct is the cloud-based technology that allows your finance team to connect systems, automate processes, and analyze your business. Contact us at Atlasphere Consulting; we’re Sage Intacct experts who can develop a winning strategy for conquering the challenges of revenue management for your business.

7 Steps to Speed Your Financial Close

7 Steps to Speed Your Financial Close

Resources

by | Sep 4, 2018 | Resources

7 Steps to Speed Your Financial Close

By Paul Johnson
CPA, CGMA, MBA

The accounting function tells the financial stories of your business—stories that influence management decisions. Problem is, executives need financial information almost on-demand. To meet this need, CFOs and controllers must evaluate their financial close process, and find a way to do it faster and better. These seven steps can help.

a group of people work to close a deal

1. Begin with “why”

Identify why you need a fast close, and what stands in your way of achieving it. John Kotter, a leading change management expert, notes that half of change initiatives fail at the start because people misunderstand the need for change and the urgency for doing so is not well established.

Some legitimate business reasons why you need a faster close process may include:

  • The need for more timely information
  • Better access to financial resources Lower costs, including reduced audit and compliance costs
  • Freeing finance to work on higher-value tasks to support the business

2. Find the right “who”

In this case, it’s a guiding team comprised of a cross-section of key stakeholders who have the drive and persistence to see your initiative through to the end. This guiding team is essential to getting buy-in and improving collaboration—both between finance and other departments and within finance itself.

3. Define the “what”

Set a goal for how fast you want your close to be. Most companies try to do it in five days or less—some even in one day. Brainstorm with your team what it would take to achieve a one-day close, and compare the gaps between where you want to be and where you are now. This includes identifying points in the close process that might be causing bottlenecks.

4. Attack the “how”

Now you can redesign your close process by reconfiguring the combination of people, technology, or process steps to be more efficient:

  • People: Make it a team effort, and be sure to get buy-in from across the organization.
  • Process: Do as much work as possible in advance of the period end date, such as bank reconciliations.
  • Technology: Most importantly, invest in an integrated financial management system such as Sage Intacct. The more that everyone feeds data into one system, the easier it will be to achieve a fast close.

two people working to close a deal

5. Kick it off and get buy-in

Alert the organization about your faster close process, and encourage others to provide feedback. Be open to accepting new ideas that could improve your close process.

6. Remember that actions speak louder than words

Take a managed and phased approach to your plan. This includes identifying early wins that can be implemented on your next period close. The goal is to reduce your close process by another day with each iteration of the process until you achieve your goal.

7. Institutionalize continuous improvement.

You can learn from every completion of the close process. Do this in a positive way, by asking what went well. Inevitably, you will also learn what needs improving. Use lessons learned and problem-solving techniques to better the next round of the close process.

A fast close leads to more timely information, which improves decision-making. Achieving a fast close means working smarter, not harder, which requires an investment in people, process, and/or technology. The good news is you don’t have to go it alone. Contact Altasphere Consulting. We have the technology and expertise to make a faster close a reality for your business.