The industry is buzzing with news of real-time revenue, and for good reason. Real-time revenue provides companies – large and small – with an abundance of benefits. At the top of the list: its ability to automate the entire billing process, enabling businesses to capture revenue in real time. Before diving into its many benefits, let’s look at what real-time revenue really is… and what it isn’t. To provide the most logical description, we did a comparison of historic revenue management processes versus real-time revenue management processes.
Revenue Management – Then and Now
Although historic revenue management processes consist of a billing system that contains invoice and payment data, a key component is missing – revenue recognition. In order to recognize revenue, accountants spend an inordinate amount of time on tedious tasks. Tasks like pulling the needed reports from the billing system, consolidating the data into spreadsheets, and making journal entries. Time-consuming – without a doubt. Error-prone – absolutely! In addition, what happens when an executive wants to know the company’s expected monthly revenue? This question is most likely met with a response of, “It’s too early to say, we don’t yet have visibility into this month’s revenue.” Probably not the response company leaders want or need. Without access to real-time revenue, businesses are at risk of making inaccurate decisions or even postponing decisions, which can have financial and competitive repercussions.
Fast forward to the present and the real-time revenue management solutions now available. From inception, these billing platforms were designed to provide seamless integration between billing, customer management, and accounting systems. With connections to your other systems, companies are able to truly automate end-to-end billing processes, minimizing delays between when events occur and when these events can be accounted for and revenue recognized. These solutions provide built-in usage processing, automated workflow, and a single source of data to power real-time revenue management.
Let’s go back to the executive’s question regarding expected monthly revenue. Real-time revenue management captures revenue as it happens. This enables accountants to provide answers to monthly revenue questions virtually immediately, and executives to make more informed forward-looking decisions.
The Benefits of Real-Time Revenue
Although we touched on a few of the key benefits of real-time revenue, there are many more:
- Automate the complete quote-to-cash process
- Reduce or eliminate errors
- Close books faster
- Keep track of revenue growth as it happens
- Make informed future decisions
- Redirect accounting resources to profit-building activities
While the benefits are plentiful, no two real-time revenue management solutions are the same.
Real-Time Revenue Management Solutions Examined
When it comes to purchasing a real-time revenue management solution, due diligence is a must. Essentially, there are two ways a billing system can provide real-time revenue. This includes multiple systems that are integrated or a single platform. Now let’s look at the pros and cons of each of these.
Integrated systems: Consisting of both billing and revenue recognition systems, these siloed solutions need to be integrated in order to pass data between them. Many times, these products are developed using different code bases, and require batches of data to be synchronized on a periodic basis. Regardless of whether synchronization takes place every 2, 5 or 10 minutes, there are delays. Not to mention potential performance issues, which invalidates any claims of providing real-time revenue. Additionally, the very nature of needing to transfer data between systems opens the door to multiple points of potential failure, including recognizing revenue in a timely manner.
Single system: With a single platform there’s no need to transfer data. Since everything happens instantaneously, revenue recognition can be triggered at the close of an invoice or from any field or entity in the platform – immediately.
But what happens if your business changes? The integrated solution will likely require customization to every siloed solution to handle the way you offer new products or expand into new geographies. The single platform solution on the other hand can easily be extended to create new objects, entities or data fields. This helps support the changes needed to drive a growing business forward.
Don’t Leave Real-Time Revenue Management to Chance
When it comes to implementing real-time revenue management, it pays to explore all available options. Since costs vary widely between vendors, it’s important to know whether the solution consists of multiple integrated products or a single system. As well as exactly what is available out of the box, and what is sold as add-ons or extras.
From a total cost of ownership perspective, a single platform built to handle everything from product setup, quoting, billing and invoicing, revenue recognition, through payment and collections in real-time will be more cost-efficient over the long term. With a single system, you’ll realize the inherent benefits of a billing solution that was designed for real-time revenue management. Plus reap the advantages of lower overhead, which ultimately enables you to boost profit margins and gain a competitive advantage. Ready to learn more about a single system designed to integrate all of your systems in the revenue stack, including ERP systems for seamless syncing of data? Reach out to our experts today.