STRATEGIC GUIDANCE
Are unknowns holding you back from pursuing revenue automation?
9 benefits of end-to-end revenue automation
When we talk to CAOs, controllers, and revenue accounting leaders, they often say, “Our revenue process is automated.” However, when we investigate, we discover a web of spreadsheets combined with a customized ERP revenue recognition module. This is not automation.
So what exactly do we mean by end-to-end revenue automation?
- 90-98% of revenue is automated in the system.
- Minimal manual interventions to process transactions.
- Real-time access to data and reporting.
- Support for new products and pricing models.
We know what you’re thinking: this level of automation is anything but easy. But we continually hear from customers that the benefits significantly outweigh the costs and implementation efforts. In fact, our customers often say they wish they had automated their revenue processes earlier.
Based on customer feedback from hundreds of implementations, we’ve compiled a list of nine key benefits of end-to-end revenue automation — no matter which solution you end up choosing:
- Scale your business without growing headcount.
- Save time and redirect resources to value-added tasks.
- Reduce errors and risk.
- Simplify audits and reduce audit costs.
- Quickly launch new products and pricing models.
- Gain real-time revenue visibility and streamline forecasting.
- Support strategic transactions.
- Elevate the role of the accounting team in your organization.
- Increase employee satisfaction and retention
1. Scale your business without growing headcount
With end-to-end revenue automation in place, revenue teams don’t have to worry about growing headcount due to increasing volume.
Spreadsheets break once they reach a certain volume of transactions, and require a significant number of hours each month to continuously validate and maintain revenue accounting data. While spreadsheets are powerful tools that accounting teams have used successfully for decades to deliver complete and accurate revenue numbers, their data capacity is limited (~1 million rows in Excel), in turn limiting the number of transactions that can be captured and processed in one spreadsheet. Anyone that’s worked with data sets that reach even 50% of this limit knows the frustration of the spinning hourglass or color wheel all too well. Due to this limit, revenue data must be segmented for processing, causing inefficiencies and opening the door for errors.
Beyond spreadsheets, ERPs were built to capture final revenue numbers, not to be a repository for all contracts with customer-related data. Like spreadsheets, ERPs also have limits (and cost implications) for the amount of data processed or held within the system. To avoid these limits and potential incremental costs, many accounting teams are faced with creating custom reports, queries, or code to gather all required data.
“It’s not unusual to find companies that are able to increase the number of contracts and increase their revenue by 100-200% — without having to add any additional resources.”
— Andrew Dailey, Managing Director, MGI Research
2. Save time and redirect resources to value-added tasks
By centralizing revenue data through automated integrations, you can eliminate sprawling networks of spreadsheets that need to be updated and linked manually. Eliminating a large chunk of time-consuming, low-value manual tasks translates directly into operational efficiencies and significant savings in both time to close the books and money. Many teams experience a reduced time to close, a reduction in employee overtime, and the ability to focus on more strategic tasks.
“Cutting one to two days off the close is very common. If you’re not cutting at least a day or two off, something’s not right. It’s not only a faster close but also the ability to have more influence in the quarter. Everybody wants to shorten the close to be able to spend more time on the business. This is another way of achieving that.”
— Andrew Dailey, Managing Director, MGI Research
3. Reduce errors and risk
Manual processes introduce several types of risk — the risk of human errors, the risk of key employees leaving and taking their inherent knowledge of the process and ad-hoc systems, or the risk of data transfer and custom scripts breaking. Manual extraction and manipulation of data, combined with employees working long hours late into the evening to close the books at the end of the month, creates an unmanageable risk of human error that inevitably results in process failures. Revenue automation reduces errors by taking humans out of the equation with a hands-off data management approach.
“Accounting teams being up all night? We all know that that’s the case. Any other part of the organization would go to the leadership and people would say, ‘This is insane. Why are we working past midnight?’ And what’s the level of error that goes into work that takes place, let’s say, after 10 p.m.? It’s not zero. What differentiates leaders is that they are able to automate 90%, 95%+ percent of all their revenue, while the others are still staying up past midnight.”
— Andrew Dailey, Managing Director, MGI Research
4. Simplify audits and reduce audit costs
Instead of process audits that involve verifying manual spreadsheets and require accountants to show all their work, revenue automation enables system audits in which auditors simply check an automated system technology. Typically, with strong technology controls, a company’s risk profile decreases, which improves transparency, reduces time spent by employees supporting the audit, and strengthens internal controls that allow auditors to quickly validate. The reduction in risk and time to validate (i.e., one sample per year instead of a large sample of manual controls) can result in overall reduced auditor fees and costs for overtime or incremental resources. According to Gartner, automating internal controls decreases audit fees by 27%. Revenue automation makes it easy to prevent and detect problems while increasing security with access controls — none of which exist with manual processes.
“When you have a system audit where the auditors are comfortable with the system that is automatically applying a set of configured rules to all your transactions, it’s a lot easier to prove out than to have a roomful of auditors sitting there trying to recalculate whatever you’ve done in all of these multiple spreadsheets.”
— Emily Daigle, VP & GM of Zuora Revenue
5. Quickly launch new products and pricing models
In today’s digital landscape, customers are increasingly finding more value in flexible business models, which in turn require businesses to be agile in their contracts — and by extension, the revenue recognition process. These models come with plenty of upside for the business, but new pricing models such as usage-based pricing, new products, or product bundles introduce complexity into the revenue recognition process. This can require additional time and resources to close the books and ensure the accuracy of final revenue numbers. Revenue automation makes it possible to handle greater complexity with fewer resources, streamlining the process for employees across multiple departments (i.e. finance, sales, management, etc.).
“What we find is that with some of these old systems, if you want to launch a new offering, you have this really intensive long project just to implement a simple bundle. And you know, we have to react quickly to the market. And that is something that is just so critical.”
— Hyrum Steed, Director of Revenue, Cricut
6. Gain real-time revenue visibility and streamline forecasting
Revenue automation allows employees in revenue management to see current, accurate (GAAP or IFRS) revenue values at any time without waiting until the numbers are finalized at the end of the month or quarter. This empowers leaders to make informed, proactive business decisions, whether they’re exploring sales incentives, discounts, or new market trends. It also allows revenue recognition teams to build more accurate forecasts for their boards, investors, and Wall Street. This helps avoid end-of-quarter surprises where numbers look different than expected or contain errors that cause auditor concern, filing delays, or declines in investor confidence. An automated revenue subledger becomes a single source of truth that stakeholders can access and analyze along multiple dimensions, allowing FP&A teams to be more self-sufficient and confident in revenue data.
“Having real-time reporting, it’s just that much easier for revenue FP&A to get a pulse as to how the quarter’s going. Often there is high volume that takes place the last week of the month, and being able to know where you are in real time, as those transactions are booked, is such a critical thing.”
— Hyrum Steed, Director of Revenue, Cricut
7. Support strategic transactions
Whether you’re acquiring new companies or preparing to be acquired, it’s crucial to have a revenue recognition system that integrates seamlessly with other systems. During transactions such as IPOs, SPAC filings, or other M&A opportunities, accounting and finance teams need access to analyze large data sets of revenue in multiple ways. For example, FP&A teams need to waterfall revenue data for all combined entities in a merger negotiation. Automated revenue recognition not only makes it easy to respond to revenue questions — it could be the deciding factor in whether a deal goes through.
“Some businesses haven’t been able to close M&A transactions because of revenue recognition issues. How do you quantify that risk? It’s existential to the shareholders and the company. When financial analysts that follow your stock don’t have confidence in your numbers, they walk away, and there are 10,000 other companies to invest in. And that’s an existential risk.”
— Andrew Dailey, Managing Director, MGI Research
8. Elevate the role of the accounting team in your organization
Revenue recognition professionals are known for their problem-solving skills, yet most revenue recognition teams spend the majority of their time manipulating spreadsheets and checking formulas. With revenue automation, highly skilled accounting professionals can focus on analyzing trends and working with other departments on strategic, forward-looking revenue planning. This gives accounting teams a seat at the table and positions them as influential and impactful business partners to the rest of the organization.
“The old version of accounting where you sat in the back end and did nothing but count the beans after everybody else made the decision — that’s long gone. Accounting has to evolve. You have to be involved in the front end with the business, with sales. To be really good in rev rec, you really need to know how your company is actually selling to customers, how products are priced, and how customers are looking at your products and services. If you invest time in truly understanding the business, revenue gets really easy.”
— Bryan Anderson, Partner of Accounting and Reporting Advisory Practice, Deloitte
9. Increase employee satisfaction and retention
Most revenue accountants would prefer to spend their time focusing on strategic tasks, such as analytics or internal deal negotiations with sales or the deal desk, than perform tedious manual processes. While accountants in any entry-level position perform some amount of manual or repetitive tasks as part of their day-to-day responsibilities, revenue automation minimizes low-value tasks and improves employee engagement and retention. These highly skilled professionals shouldn’t have to stay up late performing laborious tasks. Instead, they should be responsible for goals that make a real impact on the business while maintaining a reasonable workload.
“The workforce is changing. So the question is, ’How do I be more intentional about the workforce that I have and the experiences that I give them, and how do I invest in my people?’”
— Chris Hane, Managing Director of Subscription and Revenue Practice, Deloitte
Learn more about the author
State of Revenue Automation:
How to choose the Right Vendor to Automate ASC 606 & IFRS 15
Dive deeper into the benefits of revenue automation by watching our webinar, State of Revenue Automation hosted by Andrew Dailey, Managing Director of MGI Research and Hyrum Steed, Director of Revenue Accounting at Cricut.
Take the next step toward revenue automation
Ready to take the next step? Zuora Revenue automates revenue recognition for any business model and allows teams to reconcile and report on these revenue streams in real time. Over 90% of our deployments require no customizations. But don’t take our word for it. Here’s what our customers say:
“Zuora Revenue was designed from the ground up around the needs of revenue accountants. After just one quarter, our team experienced numerous benefits. The bundle configuration improved the accuracy of our revenue allocations, the customizable grouping rule setup eliminated tedious manual tasks for close, and the user-friendly interface extended us increased functionality and convenience.”
— Tony Zhang, Senior Revenue Manager, Nutanix
Learn how Zuora Revenue is helping the Nutanix revenue team save over 552 hours a year.
Your journey starts here
As your customers change how they want to access your products and services, you have to evolve how you do business. Learn more about how our leading Subscription Economy® solutions have helped many of the world’s most innovative subscription businesses succeed.
Want to Lead Change?
Join our global team in the relentless pursuit of transforming the world’s largest companies.