12 Jan Can Your Technology Support Revenue Recognition?
As part of the efforts governed by a project management office (PMO), outlined earlier in Navigate’s blog series on how companies can look to comply with ASC 606 for Revenue Recognition, a company will need to make sure its technology and tools are able to support these new finance procedures and reporting requirements.
Several of the top Enterprise Resource Planning (ERP) systems, such as Oracle, SAP and Workday, already offer a native solution that addresses ASC 606 standards. Implementation may simply be a matter of turning on a new financial or revenue management module or upgrading the financial application suite within the ERP platform to include revenue accounting or management. In either of these cases, Navigate can provide guidance for deploying the system update and can deliver change management and training capabilities to help finance and sales organizations learn how to use a new tool and gain command of the new processes that come along with it.
Other top ERPs that either are tailored towards small to medium-sized businesses (e.g., Sage) or are focused on human capital management functions (e.g., Kronos, Ultimate Software) do not have a robust native solution for revenue management and revenue recognition. In this case, a company has a couple technology options, each with its own costs and implementation complexities and timelines: either choose to integrate an “add-on” financial or revenue management-specific module to the existing ERP platform, or implement a new ERP with the core financial functionality desired.
Navigate can guide a business through this critical decision-making process using its software selection framework, which assesses the company’s current technology landscape and its desired or required functionality, and analyzes the industry’s available tools and their capabilities. In the case of implementing an add-on tool (e.g., Leeyo, RevStream, Softrax), a company will want to consider if or how well the technology can perform automated end-to-end revenue recognition processes, from contracting in the sales function through accounting and invoicing to financial close. Similarly, for ERPs with core finance capabilities, a company will want to pay attention to how revenue recognition operates in relation to billing, where some offer unified processes (e.g., NetSuite) and others boast independent functionality (e.g., Oracle, Workday). Additionally, when considering either add-on tools or ERP platforms, a business will want to understand how integrated and informative the analytics are around revenue management and recognition in order to drive strategic planning.
While technology is a key component of ensuring compliance with ASC 606 standards, businesses must remember it isn’t the sole solution to revenue recognition – learning and adopting new processes while using the technology and tools are equally important.