Having strong controls in place ensures billing accuracy, strengthens revenue, and can reduce downstream audit intensity and fees. Companies with recurring revenue models have to manage exponentially more rate plans and payment terms than businesses that sell through a traditional, one-time purchase model. Without controls in place, the higher the risk for human error and the likelihood that auditors may request a larger percentage of orders to be reviewed (which increases audit costs).
While the reporting structures for deal desks may vary from company to company, the most critical drivers of their success are the degree of authority they are given over the deal structure and finance’s ability to exert control over the process.
What this looks like in practice can vary. Some companies place their deal desk within sales while holding them accountable to processes and procedures dictated by the finance team. Other companies have stricter rules and don’t allow anyone sitting within the sales organization to enter quotes to ensure that every order is set up correctly from the start.
No matter where a deal desk sits, in order to create a model that works best, there are several dynamics that need to be considered.
First, companies that sell recurring revenue offers to enterprise customers have to manage a lot of complexity. They must monitor customer needs and experiences closely in order to inform the product team’s roadmap and new offers that help future-proof the business. But with every new add-on and enhancement that launches, new SKUs must be created, new bundles are introduced, product catalogs become bloated, issuing quotes requires more manual effort, and as a result, deal velocity slows to a crawl.
Second, go-to-market finance teams have to manage a flood of exceptions requested by sales on behalf of customers. Account reps tend to be hyper-focused on taking down quota and are therefore incentivized to protect price through the levers that are available to them. Examples of these levers include payment terms, contract lengths, ramp-up periods, and usage commitments. While finance teams share an interest in preserving price, they also have to consider when the revenue can be recognized, how it impacts their forecast, and how much risk the business is taking on by extending or shortening term lengths.
Ultimately, product teams aren’t going to willingly slow down progress on their roadmap, and sales teams are unlikely to structure deals in a certain way just to make life easier for their downstream colleagues. Therefore, it is left to finance teams, via the deal desk, to come up with ways to monetize the innovation, get the win, make the customer happy, and mitigate business risk.
How? Consider three things we’ve seen best-in-class deal desks do consistently well: they adopt an advisory mindset, establish real-time product level performance metrics, and automate processes wherever possible. Let’s take a closer look at each of these.