Revenue Recognition Insights

As more businesses transition away from single transaction models to increasingly complex pricing and billing structures, Enterprise Resource Planning (ERP) accounting modules struggle to accurately track complex recurring revenue streams—and, needless to say, they fail to do so in real-time. 

Many organizations have defaulted to using an Enterprise Resource Planning, or ERP, as a single-source-of-truth system to handle multiple business functions. Often praised for being an all-in-one, multi-faceted software, it often means that ERP systems may not go deep in any one area, particularly revenue recognition. Specialized needs are typically not met with the level of detail and accuracy required for precise revenue management.

Explore RightRev’s automated revenue recognition capabilities in a product demo led by our Solutions Consultant. We’ll demonstrate how to configure revenue rules for any revenue model, whether upon bookings, billings, project milestones, percentage of completion, or usage data.

In this guide, we discuss how to start your accounting career, the typical career path to becoming a CFO, and ways to propel your revenue accounting career forward.

Flexible consumption is a prime example of a compelling new business model organizations use to attract customers and bolster their profits. Everything as a Service (XaaS), as flexible consumption business models are also known, empowers customers to choose billing options that closely align with their actual usage.

A pay-per-use model allows customers to pay only for their actual usage rather than purchasing extended licenses or agreements. Pay-per-use (PPU) also lets you, as a company, open your products up to a broader audience and elicit a greater sense of satisfaction from your customers.

If you believe automating revenue recognition processes could transform your current processes for the better, this article is for you. Let’s talk about how you can make a case for revenue recognition automation.

Over the last half-decade, the percentage of software as a service (SaaS) providers utilizing consumption-based pricing models has skyrocketed from 27% to over 60%. Firms riding this forward-thinking wave include scaling startups, tech industry juggernauts, and even eCommerce powerhouses.

For SaaS companies to stay ahead of the competition, they need to quickly show value and a return on investment. Customers who buy SaaS solutions put a high value on quick return on investment (ROI) and ease of implementation at the top of their list of priorities. In fact, 87% of those customers expect to see a profit from their new tools in less than a year.

SaaS vendors are diversifying their pricing structures in an effort to make user adoption easier—now, over 60% of SaaS companies are choosing usage-based pricing or hybrid models over just subscription models. 

Implementing usage-based pricing right comes with a unique set of challenges that span front-office pricing and packaging strategy to back-office systems and processes that can account for the increased amount of complexity and data required to invoice customers and recognize revenue, for example.

As made popular in recent years by companies like Amazon, Snowflake, and HubSpot, consumption-based pricing allows customers to pay for their actual consumption of the product or service.
What’s the benefit of this?