Table of Contents
Signs that you need more automation
Signs that your business needs more revenue automation
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07 Minute Read
Better support business initiatives
Modern accounting leaders are always looking for new ways to strategically advise their business on scalability and growth. Historically, leaders would prioritize cost cutting measures and expense management. But as businesses adopt increasingly more complex business models, accounting leaders must shift their advisory focus to revenue recognition.
In fact, 76% of accounting leaders experience increasing pressure from the business to support new, more complex go-to-market models, products, and pricing. But at the same time, nearly 70% report that they do not have the right technology to address these growing demands from the business.
In this chapter, we’ll help you identify the business initiatives and challenges that may signal a need for greater levels of revenue automation.
Preparing for M&A or IPO
If your company is preparing for Mergers and Acquisitions (M&A) or Initial Public Offering (IPO), an audit of your Accounting Operations will likely be performed. This often reveals areas of potential improvement, such as the need for additional automation, controls, and process enhancements. New processes or controls may be required to validate completeness and accuracy from the source systems through revenue accounting and to the general ledger.
“It’s systems that companies are tripping up on and it’s holding them back from what they’re trying to achieve with these exits and go to market.”
– Erik Samuels, Director, Deals – Capital Markets
& Accounting Advisory Services at PwC
Too many manual processes
Research shows that revenue teams may spend over half their time performing repetitive manual tasks. And 79% of revenue accounting team members report that they rely on multiple spreadsheets in addition to their ERP as part of their rev rec process.
Adding end-to-end revenue automation software can help save time and redirect resources to value-added tasks, reduce errors and risk, and increase employee satisfaction and retention.
Tip
End-to-end automation can lead to rapid ROI
“I see this pattern quite often in the industry – a ton of automation in the CRM space but hardly any in the back office specifically in Revenue Management. Accountants are spending significant time on manual, repetitive tasks. This is not only inefficient, but it also opens up the door to errors, especially if the company is still doing revenue calculations on Excel. Revenue automation can help to streamline processes, improve accuracy, and free up revenue teams to focus on more strategic work.”
– Subbu Ramanathan, Senior Manager, Deloitte & Touche LLP
Customizations and hidden costs abound
You may assume that your current workarounds, spreadsheets, or your ERP’s revenue module will be cheaper than an end-to-end solution, but the costs can add up.
As your go-to-market (GTM) approach evolves and your customizations multiply, the extra work to create and maintain customizations for these limited solutions can incur additional, ongoing costs.
In fact, 65% of revenue accounting team members say customizations and ongoing maintenance led to a higher than anticipated total cost of ownership for their ERP revenue modules.
Adding purpose-built revenue automation software can significantly reduce the need for customization and manual tasks, thereby also potentially reducing costs.
Manual SSP analysis
How is your revenue accounting team handling SSP analysis today — is it a manually driven process? One out of five revenue accounting team members say that their inability to do automated, real-time SSP analysis is one of their biggest data challenges.
Look for revenue automation software that features a built-in SSP analyzer, which automatically reviews by line item or SKU and analyzes historical data to fully determine SSP values.
Additionally, accountants can apply rules to allocate these SSP values across all the performance obligations (POBs) in a revenue contract in an automated fashion, in accordance with their revenue policy, and all while maintaining compliance with ASC 606 and IFRS 15.
Time-consuming reporting and close process
Is your accounting team creating custom reports, queries, or code to gather required data? You may also require a third party or IT engagement to pull the data from multiple sources. This additional work can lead to a delayed close, meaning there’s less time for a CFO and the rest of the C-suite and Board of Directors to finalize all the financial summaries, forecasts, and overall story for earnings calls and speaking with investors.
Adding a solution with real-time analytics and a close process dashboard can allow you to achieve a high-level understanding of financial data for the current open period, identify data problems, mitigate revenue errors, or make adjustments throughout the month that allow for real-time, continuous GAAP revenue reporting. Look for a solution that provides revenue reports out-of-the-box, including revenue and deferred revenue waterfalls, disclosure reports, and audit trails.
“The dreaded month end close which every Office of the Close team loves to hate; As someone who has seen firsthand the rigors of closing the books with manual and lengthy close cycle processes, I urge businesses to take a close look at their revenue accounting processes and consider how automation can help to improve them. By doing so, businesses can not only improve the efficiency and accuracy of their revenue reporting, but they can also help to reduce costs, improve compliance, and help to create a more fulfilling and rewarding work environment for their revenue team.”
– Subbu Ramanathan, Senior Manager, Deloitte & Touche LLP
Skyrocketing audit time and costs
Instead of automated systems, you may be stuck with headaches like manual processes and data that must be exported into spreadsheets in order to gain the appropriate insights. Not only does this waste valuable time for the accounting team, as they have to handle more manual tasks associated with a company’s revenue recognition, but there is also more effort required by an auditor to validate the accuracy and completeness of that process.
This can increase your company’s overall risk profile, an auditor’s workload, and time spent by internal employees supporting the audit. A whopping 65% of revenue accounting team members report concerns about the risk of misstatement because of existing manual processes and control risks.
To help mitigate risk and reduce overall company costs as the business grows, it’s imperative to maximize the amount of automation within revenue accounting processes.
Plummeting job satisfaction and rising recidivism
It’s clear that the lack of automation in the revenue process is causing employees to be overwhelmed and stressed at work. A staggering 63% of revenue accounting team members report poor revenue processes affect their mental health. And 65% report working past midnight at least once in the last year.
In addition to the stress, manual processes, repetitive work, and lengthy close processes all reduce revenue teams’ abilities to focus on strategy, analytics, and business partnering, often resulting in frustration, exhaustion, and a lack of purpose.
If you or your team are facing any of these pain points, it may be time to consider solutions that deliver additional automation capabilities.
The strategic ROI of revenue automation
Automating revenue recognition and related processes delivers multi-dimensional value, not just for finance, but across the business. Here are some of the key benefits and returns on investment (ROI) that you can anticipate as part of a revenue automation transformation:
- Mitigate risk of errors and restatements: Automation decreases the chance of errors and ensures ASC 606 and IFRS 15 compliance, which minimizes the likelihood of costly restatements and potential regulatory penalties.1
- Lower audit costs and streamline audit processes: Revenue automation reduces audit times by around 50% by simplifying compliance reporting and ensuring data accuracy, which can reduce annual audit fees.1
- Scale revenue accounting operations: Automation enables revenue processes to scale alongside business growth, allowing organizations to avoid significant increases in accounting team size even as transaction volumes rise. This makes revenue accounting more sustainable and cost-effective over the long term.
- Consolidate financial system management: Legacy systems are costly and inefficient, particularly in global or multi-product environments. Revenue automation enables companies to consolidate these systems into a single, extensible platform, reducing both licensing costs and maintenance expenses. Not only does this streamline the IT and finance teams’ workload, but it also provides a centralized view of financial data, enabling faster decision-making.
- Minimize operational effort: Automation of day-to-day revenue recognition activities (contract identification, performance obligations, transaction price allocation) can cut manual tasks significantly,1 freeing resources for strategic projects and reducing labor costs significantly.
- Shorten time to close: Automating end-of-period reconciliations and reporting reduces the time needed to close books by up to half, leading to faster financial periods and reducing accounting workload.1
- Speed up time-to-market and say “yes” to more deals: Automated revenue processes reduce bottlenecks in launching new offerings, bringing revenue forward by shortening time-to-market.1 This acceleration enables businesses to capture additional sales days and gain competitive advantages.
- Reduce customer churn: Automation supports retention strategies by allowing flexible adjustments in pricing and packaging. This adaptability can lower churn,1 enhancing customer loyalty and boosting recurring revenue.
- Increase cross-sell and up-sell opportunities: By streamlining revenue processes, businesses can more effectively pursue cross-sell and up-sell opportunities, thereby increasing customer lifetime value.
1Based on internal Zuora research.
Learn more about revenue automation software
We’ve covered some of the signs that you may need more revenue automation, but how do you narrow down your options and choose the right software for your business? Keep reading to learn more.
