Conventional spreadsheet applications like Microsoft Excel are fine for small businesses with simple billing procedures and uncomplicated revenue streams. Spreadsheets may be time-consuming to manage, but they’ll carry out the required calculations and provide you with straightforward data.
If, on the other hand, you’re managing a medium-sized to a large business involved with contracts, subscriptions, deferred payments, incentives, or any type of complex pricing, the typical spreadsheet is inadequate in a number of critical areas. You run the risk of billing errors, misrepresented revenue, strained customer relations, and inefficient use of staff time. What you need is a complex billing and revenue management system that is designed to organize, catalog, and monitor all your financial records.
A complex billing and revenue management system is one that can handle:
- Subscription arrangements
- Renewals processing
- Deferred revenue
- Multiple element arrangements
- Unbilled revenue
- Milestone billing
- Percent completion billing
- Contract renewals
- Complex invoices
- Management of complex pricing
- Compliance with financial regulations
Complex billing and revenue management is a fully integrated and automated process for managing your company’s customer-related financial transactions. This type of solution expands the accuracy, availability, and functionality of these important transactions by integrating the flow of revenue data into one easy-to-manage system. In short, it eliminates the need for spreadsheets.
Advantages of Billing and Revenue Management
Automating complex billing and revenue management enables you to quantify, organize, monitor, and analyze the following areas:
Contract Management
All of the details are managed throughout the life cycle of the contract, including terms for billing and revenue recognition. The system handles sales orders, contract renewals, and multiple pricing functions.
Billing
Instead of making manual changes for every invoice, automated billing is adapted to the requirements of each customer. This includes automatic pricing (based on contracts), which can be applied to any product or service.
Revenue Allocation & Recognition
The software system provides accurate and consistent revenue booking. Complex contracts are assigned appropriate allocation and recognition schedules to suit your company’s strategies and policies. Based on Vendor-Specific Objective Evidence (VSOE), Best Estimated Selling Price, or Third-Party Evidence, incoming orders are assessed and revenues are reallocated. The system can take carve-outs from one line item and apply them to another, thus ensuring adherence to company regulations. In short, the revenue allocation policy is enforced through automation to separate order/contract-to-cash from order/contract-to-revenue (revenue).
Revenue Reporting
Because you have easy access to detailed reports and audit trails, you are able to monitor the process of revenue recognition, enabling you to proactively manage revenues and produce detailed audit information as needed.
A complete billing and revenue management system provides effective solutions because it is a package dedicated to the complex needs of your business. It is flexible, and adaptable to be used as a stand-alone or as a plug-in to your current system. A robust billing and revenue management system is designed “from the ground up” as a core component of your enterprise operating environment.
If you’re interested in going more in-depth into how organizations can move away from spreadsheet-based accounting and revenue management practices, download our whitepaper entitled “A Guide for Getting Off Spreadsheets.”