Streamlining accounting processes: How revenue recognition software can help
As companies increasingly adopt subscription-based business models, they face unique challenges when it comes to revenue recognition. Manual spreadsheet accounting methods are no longer sufficient to handle the complexities involved in accurately recognizing revenue. This is where revenue recognition software comes into play, offering automation and streamlining accounting processes while ensuring compliance with ASC 606 and IFRS 15 standards.
In this comprehensive guide, we will walk you through the step-by-step process of selecting the right revenue recognition software for your subscription business, by highlighting what software attributes you should pay attention to.
Software attributes
Ease of use and implementation:
Look for software with an intuitive user interface that can be quickly implemented without disrupting your business operations. It should also allow for the creation of monthly journal entries effortlessly.
Handling complex billing scenarios:
Choose a platform that can handle your various pricing tiers, discounts, and promotions. This flexibility is crucial in accurately recognizing revenue in a subscription-based business.
Compliance with accounting standards:
Ensure that the revenue recognition software you select is fully compliant with ASC 606 and IFRS 15. This compliance guarantees that your accounting practices are up to date and aligned with industry standards.
Automated dashboards and reports:
A robust revenue recognition software should provide automated dashboards and reports that consolidate all relevant data in one place. This single source of truth will offer valuable insights into your revenue streams and facilitate data-driven decision-making.
Scalability and adaptability:
Consider a platform that can grow with your business. As your subscription business expands, you'll need a software solution that can handle increased complexity and accommodate evolving needs.
Choosing the right revenue recognition software
Now that you have identified the key factors to consider, it's time to follow these steps to choose the right revenue recognition software:
Step 1: Identify your revenue recognition needs:
Understand the accounting standards applicable to your business and determine the specific challenges you face in revenue recognition. This includes accounting for deferred revenue, recognizing revenue over the subscription lifecycle, and managing cancellations, upgrades, and downgrades.
Step 2: Research revenue recognition software:
Look for software explicitly designed for subscription-based businesses. An example of such a solution is billsby, a subscription and billing platform that automates revenue recognition, ensuring compliance with multiple revenue reporting standards.
Step 3: Consider integration options and reporting capabilities:
Evaluate how well the software can integrate with your existing ERP and accounting systems. Seamless data sharing between systems is essential for analyzing subscription data in one centralized location.
Step 4: Evaluate costs:
Consider the total cost of ownership, including implementation, training, and ongoing support costs, in relation to the features and benefits offered by the software.
Step 5: Request a software demo:
Before making a final decision, request a demo of the software to see it in action. This will allow you to evaluate the user interface, reporting capabilities, and integration options, giving you a better understanding of how it aligns with your revenue recognition needs.
Billsby: Simplifying revenue recognition
Billsby offers a comprehensive solution for automating revenue recognition in subscription businesses. By choosing Billsby, you can achieve the following benefits:
Reduce audit risk and costs:
Automate revenue recognition processes, even in complex scenarios with diverse subscription contracts and pricing models. This automation minimizes compliance risks and reduces audit costs associated with accounting guidelines.
Support multiple revenue models:
Streamline revenue management for complex pricing structures and product bundles with a single, scalable solution that seamlessly integrates with your ERP and accounting systems.
Accurate reporting and forecasting:
Close your books faster and improve the accuracy and predictability of monthly recurring revenue forecasts.
Final words
In conclusion, selecting the right revenue recognition software for your subscription business requires a careful evaluation of your specific needs and what each software can offer. By aligning your needs with the attributes of each software partner under consideration, you’ll be successful in finding the right revenue recognition software for you.