Keen to improve cashflows and enhance bottom-line performance, increasing numbers of businesses are reviewing the methods they use for revenue recognition.
Rather than relying on traditional manual processes that take time and consume staff resources, businesses are instead turning to new automation options to streamline required accounting steps.
One of the key motivations for this shift is the uncertain economic conditions that are unfolding in 2023. Increasing interest rates and softening consumer spending mean efficiencies and cost reductions need to be found in every area of business.
A second motivation is a desire to improve financial reporting and planning processes. To ensure they are best placed to prosper amid these uncertain conditions, businesses need to have a clear picture of where they currently sit and what is projected to happen in the months ahead.
Many business leaders realise they need to shift away from their current mix of disparate processes and work to have a better flow of data from when revenue is generated to when it is processed and reported. This can help to reveal where work needs to be done and the positive impact this will have on overall business operations.
At the same time, some businesses are reluctant to invest the funds necessary to make these changes. They are tempted to stay with their tried-and-true revenue management models rather than shift to new and potentially more efficient alternatives.
An investment that delivers business value
Experience shows that investing in revenue recognition automation capabilities can deliver significant business advantages, even during times of macroeconomic headwinds. As well as having an up-to-date view of exactly what is occurring within their organisation, businesses making the change will be much better placed to alter their strategic tack and grasp new opportunities as they emerge.
Investments can also deliver benefits for businesses that already have some sort of revenue recognition automation capability in place. Existing tools may have been deployed some years ago, however, attention is now being focused on how they can deliver more day-to-day value to operations.
Business leaders are also becoming increasingly aware that these tools can add additional value in other ways. As well as streamlining the process of revenue recognition, the tools can also help to significantly boost efficiency when it comes to activities such as invoice generation and subscription management capabilities.
Taking these steps can additionally help a business move closer to having a single source of financial truth for its entire operations. Senior managers can have a clear, real-time view of exactly what is happening across the business and whether any adjustments to operations might be required.
The end result of these trends is a noticeable shift away from the widespread use of spreadsheets and even ERP platforms when it comes to efficiently and effectively managing revenues. Businesses that have already invested in automation tools are looking for ways to maximise return on that investment and extract maximum advantage from it.
The impact of technological advances
While usage of revenue recognition automation continues to grow, so do the capabilities of the tools available to businesses. This results in them being able to deliver even greater advantages by helping to streamline processes further in new and exciting ways.
Each year, the tools are covering ever-larger portions of the revenue reporting space. As their capabilities increase, they are able to replace increasing numbers of manual processes and free financial teams to shift their efforts to other areas.
With software developers continuing to focus on this area, businesses can expect this rate of feature enhancement to continue to rise. This means the value the tools can deliver will rise even further in the months and years ahead.
2023 is the year to review revenue recognition capabilities
With these factors in mind, the coming year is clearly a time when businesses should be taking a critical look at their revenue recognition processes and determining how they could best be improved.
Just because a set of spreadsheets or a well-worn manual process has served the business well for years does not mean it remains the best option.
Investing the time to understand the benefits of adopting revenue recognition automation tools has the potential to deliver significant business benefits in the months and years ahead.
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