Businesses are increasingly using technology to manage the complexities of the revenue recognition process and uncover unrecognized cash flows.
The ability to accurately predict future revenue is important for many enterprises. But revenue recognition can be difficult given how complex and disparate its sources can be. Companies might not be able to achieve the desired growth only on legacy subscription methods, usage-based billing, and single transactions. In today's competitive marketplace, it's vital for businesses to build a deeper connection with their customers, listen to their needs, and create value for them. This could mean designing customized offerings for various customer segments, often involving a dynamic mix of pricing, packaging and product blend. The complexities associated with these varied monetization models have driven demand for robust revenue automation tools.
Increasingly, businesses are using technology to streamline processes and gather greater insights into their business. Some of these automation tools can help businesses manage the complexities of the revenue recognition process, uncover unrecognized cash flows, and handle important but cumbersome tasks like contract management, billing, and revenue reporting. They can also help organizations get a better understanding of their financial health and broader business concerns.
Revenue automation helps businesses beyond just dollars and cents
Automation tools do more than simply provide CFOs with greater insights into a business’ financial health –these technologies are helping businesses quickly adapt to market changes and make informed decisions regarding resource allocation, pricing strategies, and customer engagement. By automating key revenue recognition tasks, such as contract management, billing, and revenue reporting, companies can also free up talent to focus on higher-value, strategic initiatives.
The financial close process is a critical key performance indicator for organizations and often involves extensive coordination across departments – which is inherently complex and time-consuming. Automating parts of the revenue recognition process can significantly reduce the time and effort required for tasks like manual data entry, reconciliation, and reporting, enabling quicker and more efficient period closures.
If correctly implemented, revenue automation solutions can also help go-to-market teams become more agile and effectively launch new monetization models. This may be essential for businesses looking to expand and innovate without compromising efficiency or compliance with regulatory requirements.
AI is the new frontier for revenue automation
As the use of Generative Artificial Intelligence (GenAI or AI) in the workplace increases, more companies are investing in AI to streamline back-office operations and reduce workload. When it comes to revenue recognition, AI automation technologies can accurately predict future revenue using historical data. This helps leaders more effectively plan and allocate resources, allowing organizations to make better-informed decisions.
AI technology can also be used to detect and prevent revenue fraud, helping businesses reduce costly regulatory fees by detecting unintended errors and flagging them to the appropriate person.
The challenge in implementing automation technologies
Deploying new technology requires thoughtful planning and resource allocation to facilitate a seamless and successful implementation. When it comes to something as important as revenue recognition, decision-makers should carefully evaluate their options and ensure any tech integration aligns with their goals. Finance executives should work in tandem with their organization’s technology leaders to ensure the appropriate tools are selected based on the features that would directly impact business operations.
Having sufficient talent in place is also paramount to promote proper compliance and oversight. For example, knowing that GenAI is prone to hallucinations, the people overseeing the technology should be both digitally savvy and able to navigate the relevant regulatory frameworks. This might involve building digital fluency into the corporate board and delegating a committee to routinely assess the technology’s value.
The road ahead
While the opportunities of revenue automation are real, knowing the path forward is different than walking the path. Implementing automation involves navigating various challenges—from vendor selection to data integration—and business leaders must be aware of these hurdles to successfully implement and support the technology with the right talent. However, the benefits to embracing the technology are clear. From reducing manual effort, to increased accuracy, and improved financial insights, leveraging these innovative tools has the potential to enhance financial operations and help businesses stay ahead of the curve.
Kashif Riaz is Audit & Assurance Principal at Deloitte & Touche LLP, and Subbu Ramanathan is Audit & Assurance Senior Manager at Deloitte & Touche LLP