Beginning in January, we posted a blog outlining five important reasons why Excel spreadsheets were not to be trusted for implementation of the ASC 606 guidelines. Since then, we have extended that blog post into a series devoted to the topic of Excel, focusing each post on one of the five reasons. This month’s rally: “Excel is Not an Agile Business Tool”.
The January blog post included the following blurb:
I know I’m not the first person to point this out: The one constant in our lives that we can count on is CHANGE. Change is inevitable. It is the crux of our growth and evolution. And at the helm of this change is technology. Those who choose not to keep up with innovation and change in our technology, especially in the business world, will fall behind at exponential rates.
Now how does this relate to revenue recognition, you say? Well for one, ASC 606/IFRS 15 introduced dramatic changes to the world of Revenue Recognition. Every company is adopting the new standards effective either in 2018 (public) or 2019 (private). And not only is this changing the way companies recognize revenue, but it is also changing the way they manage revenue recognition systematically.
Previously (under ASC 605, GAAP), companies could recognize revenue at the same time they billed customers. And handling these contracts and money movements was fairly straightforward, depending on the business model, of course. Now, however, the guidance dictates recognition of revenue that, more often than not, separates the billing and revenue recognition events. This complicates everything. Now add in all the other topics I’ve already harped on like a Significant Financing Component, complex allocations based on standalone selling prices, and foreign currency exchanges, and you’ve now extended far beyond “fairly straightforward”. The answer? Technology. Most businesses look to technology to solve their problems, make their working lives easier, and relieve inherent risks. Revenue recognition is no different.
And luckily for us, we also do not live in a world where only one thing changes at a time. So, while our revenue recognition standards have changed, perhaps your business has changed over time as well. Hopefully, your business is growing; you are expanding into new markets, developing new products, and creating new sales protocols and contracts… your business model is evolving as rapidly as your company does. The number of contracts you now must manage has tripled, and the people behind your growing business must manage these changes efficiently. The answer? Technology. In order to increase efficiencies and manage high volumes of data, most business look to technology to solve their problems and connect their people.
Technology is now two for two. So, here’s the part where you ask me how you can improve your technology as a way to create process improvements, remove risk, and solve complicated revenue management. Because let’s face it, if you were managing your revenue and billings in legacy data or ERP systems, Excel Spreadsheets, or some combination of the two, and you are reading this blog, chances are – you have outgrown your existing systems and it is time to create necessary change.
Spreadsheets and ERP systems cannot handle high-volume, complicated revenue recognition scenarios under the new guidance, and the more your business grows and demands efficient performance, it will require excellence in technology for reliable output. And when was the last time that Excel Spreadsheets changed? The maximum potential has been reached, and it still isn’t a solution. It’s a Band-Aid. This is where investment in a Revenue Recognition solution comes into play.
The SOFTRAX Revenue Manager agnostically integrates with existing systems to manage those complicated and/or high-volume recognition scenarios without customizations. You can dictate and create the necessary change to enable your business to grow. And the best part? Because of its flexible architecture and point-and-click configuration, Revenue Manager can easily change and grow with your rapidly evolving business.
Take the anxiety of revenue management. Invest in a solution that is meant for agility. Making the necessary changes to your internal systems mitigates security risks associated with human and technological resources. You should be focused on managing your revenues – not your spreadsheets. Contact us to learn how SOFTRAX can help your company.