In the relentless pursuit of sustainable growth, companies inevitably encounter pivotal moments where traditional methods reveal their inadequacies, particularly in core, back-office systems for billing, accounts receivable, and revenue recognition. Pressure to scale is typically accompanied by adopting customer-centric pricing options and new revenue models. These new ways to price and package introduce additional challenges for back-office teams to solve with existing systems. If your business is looking to stay ahead of the competition but is currently wrestling with the limitations of manual spreadsheets or the inflexibility of your ERP system, it’s high time to undertake a comprehensive reassessment of your revenue management strategy.
Let’s explore some common inhibitors of growth and the path to success so your business is prepared to adopt and support new revenue models.
The Pitfall of Manual Spreadsheets: A Pragmatic but Risky Approach
It is not uncommon for businesses to resort to manual spreadsheet management for revenue recognition. While this method may appear pragmatic initially, it bears inherent risks of errors and demands a tremendous amount of time and effort. As your business expands and confronts increasing operational complexities, the feasibility of aligning your growth strategy with the constraints of tools like Excel becomes increasingly unsustainable. As your business grows and new products, discounts, and packages are introduced, the sheer volume of data and manual changes that need to be kept up with in spreadsheets quickly becomes unwieldy.
We talk to prospects and customers daily who share stories of having to set up an external hard drive to run the revenue processes overnight so their main computer doesn’t crash. Seriously? How do you ensure proper controls on business-critical financial reporting if it’s handled manually and potentially being manipulated by multiple people simultaneously? One extra zero or a formula mistake can throw your entire revenue reporting off and delay closing the books. Or what about forgetting to hit the save button after you’ve just made several SSP adjustments to a contract? Is this how you expect to achieve operational efficiency?
Turn Your Accounting Team into a Growth Enabler Instead of a Cost Center
Relieving the accounting team of manual processes can free up their time for more strategic initiatives. Instead of becoming “contract detectives” and “Excel formula investigators,” they can take a more proactive approach to data analysis and reporting by having accurate and reliable revenue data at their fingertips through automation.
For many accountants, long hours and tedious tasks take a toll on their job satisfaction. With more and more accountants leaving the profession, it’s imperative to ensure a rewarding environment where accountants are armed with powerful insights that drive better decisions and make them an indispensable part of the organization through technology.
According to Bedrock AI research cited by the Wall Street Journal, 40.6% more companies reported material weaknesses due to a lack of personnel, chiefly in accounting and IT, than in 2019.
Unlocking Growth Amidst Complexity
As your business evolves, the growth trajectory can be severely compromised when constrained by the limitations of spreadsheet-based management. Recognizing the need to invest in automated, accurate, and efficient tools for revenue recognition becomes front and center, particularly as the intricacies of modern business operations amplify and job satisfaction among accountants dwindles.
Overburdening ERP Systems: Navigating the Perils
A prevalent growth inhibitor lies in overloading your ERP system with the burden of complex revenue recognition tasks. Business evolution necessitates the adoption of specialized accounting tools that not only save time but also expedite growth. Solely relying on your ERP system for revenue recognition management poses potential challenges, particularly when contending with the nuanced complexities of modern pricing and packaging, including ramp deals, bundled packages, product-led selling, and consumption-based pricing. The result is over-customizing the ERP and creating workarounds (hello more manual processes) to satisfy today’s needs. Not to mention the maintenance required to keep up with these customizations whenever you need to introduce a new product, SKU, or pricing category. At this point, you’ve spent a lot of money on consultants to customize the ERP so much that you could have built an in-house solution. While the ERP is great for core accounting capabilities, it wasn’t initially intended to solve accounting for recurring revenue transactions. The bolt-on revenue management solutions fall short of meeting the needs of modern businesses with ramp deals, bundles, frequent contract modifications, and the need to calculate standalone selling prices, to name a few examples.
Adapting to Modern Business Realities
Acknowledging the limitations of ERP systems in the face of contemporary pricing and packaging strategies is a critical step. A seamless transition to tools explicitly engineered for intricate accounting tasks ensures a smoother operation, fostering a more rapid growth trajectory for your business in the dynamic modern business environment.
The Power of Data Connectivity: A Misstep Often Overlooked
The third commonly overlooked mistake involves neglecting the significance of data connectivity. Any disconnection between various stages in the buyer’s journey can hinder quote-to-cash alignment. A comprehensive approach to revenue recognition and reporting needs, coupled with streamlined processes facilitated by the right tools, enhances your capability to refine your revenue strategy and propel your business toward sustained growth. Many solutions on the market attempt to offer Order Management, Billing, and Revenue cohesivity, but are merely disparate solutions duct-taped together and offered as a bundled solution without a common and unified data model among the Quote-to-Cash continuum. You’re left to do accounting gymnastics to make sense of all the contract, billing, and revenue data. It becomes an accounting nightmare when the data doesn’t speak a common language. Then, there are point solutions that only solve simple use cases and fail to accommodate the complexity needed for modern businesses, such as consumption, product-led sales, free trials, contract modifications, SSP analysis, etc.
Achieving Quote-to-Cash Harmony
Maintaining a data-centric approach throughout the buyer’s journey is paramount. Seamless connectivity across quote creation, order processing, billing, and revenue recognition ensures quote-to-cash alignment, optimizing your revenue management strategy for maximum efficiency. RightRev was built to make revenue accountants’ lives easier and relieve them from the challenges associated with the most common approaches: spreadsheets, the ERP, or antiquated and disconnected legacy solutions.
RightRev offers a solution that natively syncs with Salesforce Revenue Cloud for streamlined Quote-to-Revenue processes on the Salesforce platform. Its harmonious data model allows for data continuity across products, quotes, orders, billing, invoicing, and revenue recognition. Accountants love this option for seeing Bookings, Billings, and Revenue in one place. The drill-down granularity from Revenue Contract lines back to the Order and Products is a huge value-add that allows for confidence in revenue accuracy and speeds the month or quarterly-end close process. In addition, RightRev offers a standalone solution that works with any up and downstream tech stack for easy revenue management.
The True Cost of These Mistakes: Valuing Your Time and Adapting to Complexity
In recognizing these mistakes, it becomes evident that time is a valuable asset. Transitioning from manual spreadsheets to automated accounting tools liberates precious time for more strategic initiatives, fostering accelerated growth by redirecting focus towards more impactful aspects of accounting operations. Furthermore, pricing and packaging complexities introduce challenges that necessitate adapting to new solutions tailored to meet the demands of modern businesses. With RightRev, you can seize control of your revenue and confidently embrace complexity, knowing you have a flexible, scalable, and powerful revenue recognition system that propels you and your team toward operational efficiency.