Revenue recognition

Revenue recognition software

FINANCE SPECIALIST

Marjorie Stern Jackson

Share this article:

What is revenue recognition software?

Revenue recognition software helps your business automate the process of recognising revenue in accordance with accounting standards such as ASC 606 in the US and IFRS 15 internationally.   These standards specify that your company must recognise its revenue when earned, not just at the time of invoicing. Tracking the correct amount of revenue to recognise can be time consuming and error prone. Revenue recognition software can automate this process, saving time and improving accuracy while ensuring compliance with regulatory standards for reporting.

Types of revenue recognition software

Your company’s specific needs including budget and software stack will determine the best type of revenue recognition software to use.  These are the broad categories of available revenue recognition software:

  • Specialist revenue recognition software:  Dedicated solutions focused solely or mainly on automation of the accounting requirements for revenue recognition, generally linking to your accounting system and providing help with journals.   Minimal if any help with analytics and broader reporting or contract management requirements.
  • Revenue recognition module of an ERP system:  At the opposite end of the spectrum are comprehensive enterprise resource systems (“ERPs”) that integrate a number of reporting, control and analysis functions into one system, generally bringing benefits of interconnectivity at the expense of high cost and complexity.  These systems include revenue recognition as one integrated feature among many, suitable for businesses seeking a unified platform to manage all financial processes, with the budget to pay for it.
  • Muti-purpose automation software: Sitting in the middle are software platforms like ScaleXP that integrate a number of key financial and operational functions in one place, providing the benefits of software integration with less cost and complexity than an ERP.  These tools are often most suitable for small and medium sized businesses who want the benefits of an integrated solution without the cost and complexity of implementing an ERP.   

Automate Revenue Recognition

Empower your business with real-time, automated revenue recognition that's compliant with ASC606, IFRS15 and US and UK GAAP.

Key benefits of revenue recognition software

  • Accuracy in financial reporting: By automating the calculation and recording of revenue, this software reduces the risk of errors and ensures financial statements are precise, which is crucial for accurate financial disclosure and analysis.

  • Compliance with accounting standards: Revenue recognition software is specifically designed to adhere to strict standards such as ASC 606 and IFRS 15, thus mitigating the risk of compliance breaches and the penalties that can accompany them.

  • Audit readiness: Systematic and accurate record-keeping facilitated by revenue recognition software ensures that businesses are always prepared for audits, with easily accessible and verifiable financial data.

  • Time and resource efficiency: Automating the revenue recognition process saves significant amounts of time and frees up resources, allowing finance teams to focus on more strategic tasks rather than routine data entry and calculations.

  • Scalability: As businesses grow and transactions become more complex, revenue recognition software can scale to meet increased demands without the need for additional resources, maintaining efficiency and control.
  • Support for revenue forecasting: Advanced revenue recognition tools often include forecasting capabilities, which allow companies to project future revenues based on current contracts and historical data, supporting effective budgeting and financial planning.

Examples of revenue recognition software

Specialist revenue recognition software

These products provide specialist revenue recognition solutions, generally focused on a specific user requirement and with limited analytics or reporting.

  • Flowrev: Automates cost and revenue recognition for accounting purposes, using rule based inputs; minimal reporting or analysis.

  • RightRev: For users of Salesforce. Applies rules about contracts to generate recognised revenue for accounts and associated proposed journal entries.
  • Synder RevRec: For users of Stripe contracts. Automates the revenue recognition process for Stripe transactions.

ERP Modules

These are generally modules within larger enterprise resource systems, forming part of a larger software ecosytem from one provider.

  • Oracle NetSuite: Includes revenue recognition along with other financial processes.

  • SAP Revenue Accounting and Reporting (RAR): Tailored for companies with complex revenue recognition needs within a broader ERP framework.

  • Sage Intaact: ERP solutions that include specialised tools for managing revenue recognition across various industries.

  • Workday Revenue: Revenue recognition included in its broader ERP capabilities.

Multi-purpose automation software

These are stand alone products which provide a broader revenue management solution, linking existing systems together.

  • Chargebee: Provides collection and billing management and revenue recognition support, but not journal entries.
  • Maxio: Combines revenue recognition with subscription management and some metrics reporting; doesn’t provide journal entries; highly complex and expensive.
  • Recurly: Provides revenue recognition information using rule based inputs; focus is more on billing and subscription management
  • ScaleXP: Fully automates revenue recognition, including journals, through any combination of text recognition and rules; also provides contract management tools as well as automated smart reporting including SaaS metrics, dashboards, and presentations.

Benefits of using ScaleXP revenue recognition software

  • Text recognition for revenue recognition: ScaleXP can save you significantly more time than other revenue recognition software products by using its text recognition capabilities to automatically spread revenue to the appropriate dates. Automatically captures dates and spreads revenue over the appropriate period.

  • Custom revenue recognition rules : Selection of revenue recognition automation tools enables you to customise the automated process to meet your needs: use the text recognition or set rules by account or invoice. Use for percent completion or other rule based contracts.

  • Contract management and invoicing linked directly to your accounting system: ScaleXP not only automates revenue recognition from your contracts with journals provided right to your accounting system, it also integrates with your CRM data to produce booked versus billed and renewals schedules.

  • MRR and customer revenue analytics: View earned revenue in your choice of views: monthly recurring revenue (MRR) or as compliant with financial standards, along with upsells, downgrades, lost customers, new customers, and reactivated customers.

  • Customer analytics and smart KPIs: See important contract metrics such as customer churn, revenue retention, lifetime customer value, ARR (annual recurring revenue), CAC (customer acquisition cost) payback. All included in your package and available in real time, linking accounting figures directly to your management reporting in real time.

  • Dashboards and management presentations: Visualise revenue alongside other business metrics in real time and export directly to your PowerPoint management pack.

  • Revenue forecasting: Combines CRM integration and automated revenue recognition to forecast sales direct from your CRM pipeline

Ready to transform your financial operations and save hours or even days from your month end processes and reporting?

Integrate your Accounting Software

Take back your time by automating revenue recognition. See if we integrate with your accounting and CRM systems.