Staying on top of revenue recognition is a major challenge. Getting it right means keeping pace with fast-changing licensing and distribution models, managing the complexities of multi-element contracts, and complying with stringent SEC and Sarbanes-Oxley regulations. And you've got to stay ahead of ever-evolving revenue recognition rules such as ASC 606.
On-premise ERP systems like SAP, Oracle and Microsoft Dynamics GP aren't up to keeping pace with these constant changes. This means finance teams often resort to complex spreadsheets that sap finance productivity, limit visibility and introduce significant risk of error and non-compliance.
The concept behind a cloud-based revenue recognition software solution is simple yet powerful—provide complete support for all key revenue recognition standards, automated revenue calculation, and real-time dashboards and reporting through a fully integrated solution. The result is greater ease of use and flexibility, better data integrity, more visibility and lower ongoing maintenance.
An effective revenue recognition software system requires a combination of software and processes, as well as the flexibility to adapt to changing conditions. Cloud software can provide the needed foundation, as well as anytime, anywhere, role-based access for key finance stakeholders. Proper revenue recognition touches every part of the process, starting from sales order management all the way to revenue forecasting. Traceability, centralisation, efficiency and visibility are the four keys to an integrated approach and are critical in any revenue recognition software system:
From the beginning of the process, from sales order to invoice to revenue recognition to journal entries to the general ledger, each step related to revenue recognition should be completely traceable. This allows you the flexibility to change at any step in the process or apply particular details or controls.
The second key to effective revenue recognition is a single central transaction history. By having a fully centralised transaction history that covers all aspects of revenue recognition, a company can make changes as needed, modify reporting processes and adapt to new regulations.
The biggest downfall to most revenue recognition software is the need for constant reconciliations between multiple systems. A single integrated system for revenue recognition eliminates this by pulling it all together in one system, delivering substantial gains in efficiency and productivity.
The last and probably most important piece to effective revenue recognition is visibility. With most systems, it’s not possible to look at information in real time. An effective cloud-based system for revenue recognition enables real-time, fast, efficient reporting and forecasting that can be used to analyse and understand information for reporting and compliance with policies and regulations.
An integrated approach ensures that you understand every step in the revenue recognition process. Regardless of specific regulatory requirements, it provides you with the flexibility to change your revenue recognition processes on an as-needed basis. Coupled with on-demand cloud delivery, your company can quickly and easily realise all four keys needed for effective revenue recognition.
Cloud-based revenue recognition software that is fully integrated with financials will enable your company to move past complex spreadsheets to a more productive approach that increases your speed, visibility, accuracy and compliance.