What IT Managers Need to Know About Revenue Recognition

By Aarthi Rayapura December 1, 2015

Editor’s note: Today’s post is the latest from our guest columnist, Amanda G. Carrillo, Pre-Sales Accounting Manager for Leeyo. Carrillo, whose extensive financial background includes revenue accountant, finance analyst and operations manager roles in direct engagement with executive management and IT teams toward streamlined workflow and metrics, will share her opinion on a number of topics from time to time. Here, she discusses revenue recognition and the new guidance from the perspective of IT management.

During my time as a revenue analyst, I thoroughly enjoyed working with my IT business partners. In fact, across industries and financial roles, I can accurately say I’ve had the opportunity to work with some of the best.

How do I know, you ask?

Because, as professionals, we established mutual respect for the others’ expertise, and recognized nobody could – or should – make assumptions about one another’s job. Citing examples of how things haven’t worked quite as smoothly, some IT analysts only wanted to narrow revenue recognition processes down to rules and conditions which could fit perfectly into a system workflow that absolutely could not be changed once defined. In another case, financial peers of mine wanted IT just to ‘get it’ and do as they said because the job of IT is to figure out the ‘how.’ This counterproductive relationship was the equivalent of two people trying to communicate in two very different languages: code vs. policy, system requirements vs. business objectives, etc. I don’t know how many of you can relate, but watching the interaction between some IT and finance teams was, at times, truly like mixing oil and water.

So what do IT managers need to know about revenue recognition?

Some handy tips I can offer up:

1. Cross functional communication across business units in any industry is crucial not just for successful implementation of a solution such as RevPro®, but to simply get the conversation started about business requirements.

2. A principle-based guidance, such as the incoming new revenue recognition standards, requires configuration flexibility. Rule-based engines will be pushed to new limits because, depending on specific customer requirements, one size may or may not fit all.

3. System requirements will continue to evolve as revenue business teams modify policies for performance obligations. IT teams should (a) be prepared to deploy internal solutions in multiple phases and (b) have the flexibility to update existing configuration once deployed. The reality is that revenue teams may not have all of the answers at the time of adoption.