As an organisation matures, data is generated at an unprecedented pace and, as a result, makes creating accurate financial statutory reporting a time-consuming and error-prone task. Not having the right financial tools may debilitate your ability to comply with IFRS 15 in a timely and reliable manner.
Although human intervention is necessary to make final business decisions, technology solutions have the power to help you with intelligent recommendations and predictive analytics based on historic data. This can help you fully investigate the operations of your business and how it will change under the new standards.
An effective technology solution offers two main ways of reducing the menial manual tasks that can inundate a business: automation and flexibility.
First and foremost, the right solution helps you track various revenue streams, automate allocations and calculations and configure different rules and templates for different calculations, all without the use of overly complex spreadsheets.
Additionally, a strong technology solution simplifies the act of implementing a transition method. Your choice of method should not be driven by the capabilities of your technology systems, but rather by what is best for your investors, auditors and other stakeholders. You should be able to recognise revenue under the current standards up to the transition date, then seamlessly deploy retrospective or parallel recognition processes – which is where the right technology solution becomes crucial.
With the right system in place, you can produce clear audit trails and attach supporting documents and evidence directly to transactions. The correct tool also provides user-friendly reporting options, allowing you to customise your data on a high-level or granular level. With better reporting capabilities, your business teams will be able to make better decisions.
What should you look for in a revenue recognition cloud application?
1. Flexible data models – As revenue models continue to multiply (from product-based to SaaS to bundled and usage-based contracts), there is more of a need for a tool that can recognise revenue from multiple sources, including directly from opportunities, orders, contracts, projects, and invoices.
2. Seamless integration – Effective and efficient cloud applications should be able to tackle the power of your existing platforms and integrate seamlessly with your other applications, including customer relationship management (CRM) and professional services automation (PSA).
3. Configurable rules - The right tool enables you to create rules based on your needs and how you want to recognise revenue. It’s crucial to have a system that adapts to what best suits the needs of your business —not the other way around.
4. Forecasting capabilities – Retrospective reporting should be a thing of the past – a cloud application should allow you to derive revenue forecasting with both recognised and forecasted values on multiple revenue source data.
