Are you fine carrying a substantial risk of errors, restatements and potential fines? If not, then switch from manual spreadsheets to an automated revenue recognition solution right away. In addition to the above risks, manual processes cause a massive loss of time and money which most businesses cannot bear.
The good news is that you can avoid these problems by utilizing a revenue automation software. But, this does not mean that you go for the first revenue automation software that you come across. Instead, you need to choose a revenue automation software that fulfills the required criteria. So, what are the things to consider? Read on to find out.
Choosing the Right Revenue Recognition Software
Regardless of the industry, most businesses are required to perform revenue recognition. However, the analysis of revenue recognition is more complex in some industries than the others. The good news is that revenue automation software makes revenue recognition a level-playing field for everyone. You recognize the revenue recognition challenges under the new ASC 606 standard and understand why an automated solution is required for the process. The only thing that remains is for you to pick the right automated solution for revenue recognition. But, how do you do that? Following are the four qualities that make up a good revenue recognition solution.
The solution should be able to track contracts based on the 5-step revenue recognition model. This means that the solution should:
- Automate and track each contact with the customer
- Track each contract’s performance obligations
- Identify and separately track the transaction price’s fixed and variable components
- Track and report on each PO’s allocated revenue amount
- Recognize each PO revenue based on the appropriate recognition trigger
The solution must have the ability to report asset/liability balances of net contracts as well as any receivable balances.
The solutions should ensure your business’ compliance with the revenue recognition standard. The solution should be an automated, scalable, and auditable software which you can use to maintain compliance with accounting guidance and existing policies. The solution should be able to track and report manual changes to system settings and transactions and also systematically implement and review changes to policies and guidance.
The new revenue recognition standard has made it more important than ever to move to an automated solution to ensure compliance. Since the automation process takes a bit of time, now is the right time to start looking for an automated solution that ticks the compliance boxes.
Standardized and Simple Revenue Accounting
Last but not the least, the solution you pick should standardize and simplify your revenue accounting. This means that it should standardize your accounting policies and business processes across regions. If you ensure this, your revenue users will be spending less time crunching numbers and more time reviewing complex or unique deals.
Do you want a revenue recognition solution that fulfills the above criteria? Then look no further than the solution offered by CallidusCloud!