Chief financial officers (CFOs) and senior management teams are reassessing their revenue management practices and technology in response to shifting market conditions that demand new billing models. That’s according to a FinancialForce and IMA survey of 6,000 accountants and financial professionals worldwide.
Market demand is also leading to the adoption of new billing models, supported by more advanced software and technology, the survey found.
The most common trigger of change in revenue recognition methods is billing models, followed by top management decisions, better software and changes to revenue recognition standards.
“It’s shocking that companies are still turning to spreadsheets to manage the financial health of their organizations,” Raphael Bres, general manager of Financial Management at FinancialForce, told eWEEK. “Not only are they error-prone, but they require a lot of legwork on the part of the finance team. And they certainly don’t equip a company to pursue rapid growth, given that the financial systems are fragile, complex and unable to scale quickly. There’s no way around it: The fragility and complexity of spreadsheets make them inadequate to handle today’s billing and accounting needs.”
The good news, he said, is that strong revenue management applications are on the rise, and the data predicts this shift to continue.
“It’s no wonder why—the majority of people who switch are more satisfied and confident in the integrity of their financial data,” he said.
In addition, CFOs are expanding their reach across their organizations, developing a stronger role in corporate portfolio management and capital allocation.
“This is in part due to emerging technology that allows them to eliminate the laborious, manual tasks that their teams are traditionally entrenched in,” Bres said. “Finance teams, as a whole, are freed up to focus on more strategic initiatives that facilitate growth and innovation in their companies.”
Only half of respondents said their firms fall under Generally Accepted Accounting Principles (GAAP) revenue recognition guidelines, and of those who do not, two-thirds have not yet assessed the new standards.
“Compliance a top concern for finance teams regardless of industry or company size; yet, small businesses often feel they lack the resources to feel confident in their compliance,” Bres said. “That fear doesn’t have to be founded in fact, though. There’s a wealth of resources available if small businesses know where to look. And as the regulatory landscape shifts, these communities are often on the front lines with insights into what the changes mean and how to address them.”
Bres noted small businesses also should approach their compliance through the lens of future growth.
“They likely won’t be a small operation forever, so they should select tools and apps that will can scale with them,” he said.