Revenue is one of the most important KPIs for an organization. A revenue multiple may be used to value a company for an interested buyer, strategic partner, or investor. Strong annual revenue growth underpins company value, drives investments and new business generation, and may entice key new talent to join. Failure to accurately account for revenue could also result in serious issues that can damage a company’s brand and jeopardize the business.
Yet, most companies still manage revenue and revenue recognition compliance with Excel, a custom ERP solution, or a hybrid of the two. It’s often highly manual and requires large teams who can take a couple of weeks or more to complete monthly revenue close activities. Revenue team attrition is typically 30% or higher which has a damaging impact on performance.
The revenue recognition standards, ASC 606 and IFRS 15, prompted many organizations to establish new policies and controls and helped drive the creation of data foundations rich with granular contract and revenue data. However, for many organizations these new approaches and processes were shoehorned into legacy architectures or existing manual-heavy solutions without attention to improving the revenue outcome or building new revenue insight that would strengthen the business.
With several years of global mergers and acquisitions resulting in complex and poorly integrated systems environments and today’s rapidly evolving business models requiring a constant stream of new product and service offerings, companies need to take a holistic approach to compliance and revenue management. Between the pressure to bring disparate data points together for analyzing and generating actionable insights, the drive to increase revenue quality, and the ongoing evolution of revenue recognition interpretation and application, revenue has never been more complex or more important as a driver of corporate value.
