4 Risks of Using Spreadsheets for Revenue Recognition

4 Key Risks of Using Spreadsheets to Track Revenue Recognition

For companies that sell physical goods, recognizing revenue on sales is very easy and straightforward. Depending on the shipping terms, once the product is shipped or received by the customer, the revenue and costs for those goods are recognized.

However, if your business sells software, services or other intellectual property, then the rules, as well as the accounting for revenue recognition, can be a nightmare.   There are a myriad of revenue recognition standards that must be applied over the period of the contract or agreement. Most importantly, many companies are not aware that these rules are expected to undergo substantial changes over the next few years.

Revenue recognition is a significant problem for Software as a Service companies (SaaS). They process hundreds or thousands of orders every month. Each element of their contract, including subscriptions, support and professional services must be accounted for and tracked separately.  Many times, these orders can span three to five years.

Faced with these challenges, how do the majority of firms we speak with handle their revenue recognition?  Spreadsheets.

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How to Improve Communication and Collaboration between Sales and Finance

In this video, Intacct discusses how they can improve collaboration between sales and finance teams using Intacct Collaborate. This product, which is based on Salesforce’s award winning Chatter platform, allows all members of the finance and sales team to communicate and collaborate easily and efficiently.

In most companies, the primary way that finance and sales teams communicate among themselves and with each other is through email. With traditional email, there is no easy method to keep track of all of the conversations in a way that references the customer or invoice that is being discussed. Furthermore, if these email conversations happened several weeks ago and someone wanted to review the issue at a later point in time, they would have to search thousands of emails to find it in their history. This makes email highly inefficient for team collaboration.

Intacct Collaborate allows users to collaborate securely in the context of financial records. Conversations are stored with the individual customer, vendor, invoice, or general ledger records where they are posted. Users can also attach relevant documents, such as credit reports, to these conversations. This approach allows everyone in the finance and sales team instant access to any issues in a way that they can be easily reviewed, understood and updated. Issues can be quickly identified, discussed and resolved.

According to Intacct, Collaborate is available free of charge to all Intacct users and does not require the company subscribe to Salesforce. Intacct will provide the licenses to their users free of charge if they don’t subscribe to Salesforce.

Intacct – Intacct Collaborate

How 3 Software Companies are Streamlining their Revenue Recognition and Billing

In this video from Intacct, three finance professionals talk about their experiences with Intacct’s revenue recognition, billing and integration to Salesforce for their software and software as a service (SaaS) companies.

Alan Taylor, CFO of Adaptive Computing, talks about how Intacct has significantly streamlined the revenue recognition process to the point where it takes his staff one quarter of the time that it did before implementing Intacct. Their billing is significantly less complex which has improved customer communication and reduced billing questions for the finance staff.

Tanya Yakhnis, Controller at Tandem HR, discussed how Intacct has been able to eliminate the spreadsheets she used to use to manually track revenue recognition for the invoices that they generated. All revenue recognition is now done automatically. Intacct has also provided Tandem HR the ability create reusable invoice templates for each of the entities that invoices instead of having to create a new format for every invoice.

Brenda Luebbers, Director of Finance at Bizo, talks about how Intacct’s automated revenue recognition and direct integration to Salesforce CRM allows them to easily prepare and send 250 invoices per day and saving hundreds of man hours every single month.

In summary, these finance professionals believe that Intacct has significantly streamlined their billing and revenue recognition functions, eliminating manual processes and spreadsheets, allowing them to focus on driving growth.

Intacct – Choose a Cloud Accounting System for Software or SaaS Business