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