Many legacy financial systems are not equipped to handle the complex revenue management requirements imposed by evolving business models and ASC 606. Often companies are forced to adapt to the changing marketplace with manual workarounds that are inefficient and vulnerable to human error.
Building customizations to existing back-office infrastructure is both inefficient and expensive. This common strategy often results in its own challenges, such as vendor and version lock-in, auditability issues, and increased manual effort.
Every manual touch in the revenue process increases the risk of human error even for the most talented teams. A revenue management process that is not fully integrated and automated decreases the productivity of your team and increases your security risks.
Many companies have opened their eyes to the benefits of the recurring revenue economy. However, these models introduce additional complexity to the billing process as well as to revenue recognition. Legacy financial systems often lack the functionality to automate one or both of these processes.
Subscription and consumption billing models are becoming increasingly popular. But many companies must also maintain legacy complex milestone and renewal billing models when migrating. The need to bill for multiple models on a single invoice adds complexity that most companies are not equipped to handle.
Renewing contracts is always good for business, but accurately tracking the revenue stream throughout the contract renewal process can be a challenge. Many companies struggle to efficiently manage renewals without easy access to the appropriate data to understand new revenue, churn, and total renewal revenue.
Even for companies that are now compliant with the new guidance, the massive accounting shift in ASC 606 / IFRS 15 requires changes in both upstream and downstream workflows. The new challenge is not establishing compliance, but rather maintaining compliance with the least amount of disruption and greatest amount of efficiency.
The revenue recognition process is complex and requires source data from an increasing number of systems. Many companies are finding manual processes ineffective for aggregating and grouping the disparate data in a way that allows for the robust analysis and reporting required for modern revenue recognition.