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Revenue Recognition Efficiency is Impacting ERP Purchase Decisions

Fri, Mar 8, 2013 @ 07:11 AM / by Mayur Shah

Revenue Recognition Efficiency

Your task for finding the right ERP solution could potentially begin and end with revenue recognition software. For a lot of business leaders, this is certainly the case. Consider this: With accurate revenue recognition capabilities for your key analysts and decision-makers, financial restatements could become a fear of the past. Financial reporting relief for you is on the horizon.

The Wall Street Journal recently ran a story in September that the most-frequent explanation companies gave for filing restatements stemmed from inaccurate revenue recognition accounting and income taxes.  Specifically, of the 51 companies that actually disclosed the cause of restatement, 16 pointed to revenue recognition, beating out other accounting standards such as derivatives and hedging, and business combinations.

Revenue recognition is so hard to pin down because there are many tracking components involved. If you’re a leader, you have to account for hidden revenue, carve out expenses, SEC regulations, and workflow backlog between departments, to name a few concerns. However, with an automated system in place to integrate and manage all of these odds and ends, your final numbers will be current and accurate, placing your business ahead of the competition.

The general rules for software revenue recognition seem simple enough:

  • There must be evidence of an arrangement
  • Delivery has to have occurred
  • The fee must be fixed and determinable and
  • Collection must be probable

However, we know that, for example, in high-tech the SaaS arena is as complex as it gets, with changing subscription and implementation/setup fees that must meet the GAAP definition of stand-alone value.  That’s how efficient revenue recognition can enhance your business goals and objectives, preventing unnecessary stress, even in the face of Multiple Element Arrangements (MEA).

Think about how these events can change how a contract is revised, ultimately leading to extending payment terms and revenue having to be deferred.

Your business deserves every opportunity to excel, and having revenue recognition efficiency from your ERP software will allow for just that. In turn, ERP vendors need to be aware of the significance of revenue recognition, and how it can at times be the biggest selling point of their system—more than general ledger or inventory management, for example.

As a strategic partner for Adobe/Omniture, Bramasol developed a revenue recognition solution that delivered results. Watch the video of Sean Warren current CIO of Mountain Medical, as he shares the challenges that lead to needing a solution, process of evaluation, what RICEFW means and how this can help you save time and money in the process, as well as the bottom-line results for Omniture.

Topics: SAP, Revenue, Recognition, ERP, IFRS, GAAP, financial reporting, Adobe, Omniture

Mayur Shah

Written by Mayur Shah

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