Spreadsheets are no longer the best resource for revenue management. NetSuite’s financials solution takes much of the complexity out of the constantly evolving revenue recognition mandates. This is true whether a sale covers just one performance obligation, a series of them over a certain period of time or a diverse bundle of them.
What results is an automated revenue policy that ticks the boxes for compliance, real-time revenue intelligence and data you can use.
NetSuite Revenue Management Benefits at a Glance
- It frees up accounting teams to focus on policy exceptions instead of spending many hours recording and managing revenue. This reduces the hours/days to close.
- Compliance with industry mandates and guidance is assured both today and tomorrow. NetSuite Revenue Management integrates with Multi-Book Accounting to cover single transactions under numerous standards.
- Real revenue impacts can be analysed and forecasts dynamically respond to actual postings. This leads to an up-to-date expected revenue picture for the future at all times. Additionally, you get the ability to reach back into the source sales transaction or document.
Revenue Recognition
Sales agreements often combine products and services with certain deliverables. For example, a cutting-edge security system may be installed and monitored, with expert consulting services offered alongside. This means that the revenue to be recognised may be an equal amount at fixed intervals or it may be different at different intervals. In either case, NetSuite Revenue management enables the automatic scheduling of revenue recognition at the appropriate times.
Automate Revenue Policy
Exceptions can be easily managed when they arise by holding revenue, updating the revenue recognition schedules or other custom changes.
Planning Automation
Revenue can be automatically scheduled to recognise appropriate periods based on set rules. The triggers, creation and commencement of a revenue plan are governed by re-usable revenue rules, all associated with a specific sales transaction. Plan duration is included too.
Multi-currency Transactions Support
Fluctuations in exchange rates will be accounted for as necessary in each period.
Automation of unbilled revenue recording
All unbilled revenue will be recorded automatically via the identification of revenue elements that lack corresponding bills. This saves time when closing.
Real-time Financials
Revenue Plans enable automatic posting to the general ledger on your schedule. This can be done as frequently as you like.
Management of Balance Sheet Accounts
Automatically adjust contract asset balances and contract liability based on real-time revenue data and billings.
Flexible Forecasting
Flexible forecasting can be provided to account for updates to revenue projections based on business events in real-time. This includes things like updates to project planning or withholding planned revenue for a future period.
Management of Complex Allocations
It can be challenging to manage revenue accurately when delivering products and/or services over numerous accounting periods. Industry standards dictate the allocation of contract prices based on what you are delivering and when. NetSuite provides sophisticated allocation features to facilitate comprehensive compliance.
Dynamic SSP (Standalone Selling Price)
The SSP can be defined as an unwavering constant or a dynamic formula. The latter option can be connected to information relating to other revenue elements. For example, your SSP for support could be based on a percentage of the licenses included within that contract. With Item Revenue Groups, all items with matching requirements will have the same SSP to eliminate duplication. With user-defined dimensions, a single item (or groups) can have multiple SSPs to meet stratification requirements.
Robust Allocation Calculator
SSPs can be leveraged to automate arrangement consideration allocation. This covers all elements within the arrangement, including ASC 606 and IFRS 15 standards support.
Multiple Performance Obligations
Special attention is required for contracts with multiple components delivered at different times. This is because revenue recognition is dependent on how and when components are delivered. NetSuite facilitates configurable revenue schedules even when the arrangements are particularly complex.
Flexible Revenue Contracts
Make your view of the revenue contract as accurate and agile as possible. Revenue arrangements contain revenue elements, which are your performance obligations. Each element consists of individual attributes like revenue allocated amount, revenue rule and revenue plan start/end dates. You can merge revenue elements across linked orders and contracts, or you can split them into multiple arrangements. The result is an accurate representation of the revenue contract no matter how the revenue source transactions are managed and billed.
Revenue Recognition Capabilities for Every Industry
Companies generally have industry-specific guidance for revenue generation where it relates to licencing, selling, hosting, leasing or marketing products/services. Multiple deliverables are usually encompassed in these arrangements.
Packaged software arrangements containing multiple elements often involve different delivery dates for products and support, so accounting departments must recognise and defer revenue amounts as required.
- Supporting revenue recognition over time: this can be based on both output, like units produced/hours delivered, and input like resources consumed and relevant costs.
- Support for percentage of completion: if your project leverages percentage-of-completion mechanisms, this is supported.
- Support for event-driven revenue recognition: revenue recognition can be aligned with specific event triggers like the fulfilment of an item. Single performance obligations can be associated with more than one plan to enable partial fulfillments/billings.
Multiple Accounting Standards for Revenue Recognition
Today’s globalisation of business is powered by a number of factors. These include:
- Global Capital Markets
- Economic Interdependence
- Foreign Direct Investment
To meet revenue recognition mandates when reporting financial results where multiple accounting standards apply, accounting departments everywhere can engage a robust multi-book accounting engine to record and post revenue-related activity. This covers all books at the same time, eliminating data entry replication and the need for manual intervention.
SSPs, Revenue Rules, Plans and Arrangements that are Book-specific
Concurrent posting to all necessary books can be automated as business transactions take place. This is preferable to ‘after-the-fact’ posting or waiting to replicate data entry at the end of period and posting adjustments then.
Book-specific Management of Foreign Currency
Accounting departments can use book-specific functional currencies during the calculation of the impact on the general ledger. This includes realised and unrealised gain/loss of foreign currency amounts in each transaction.
Book-specific Financial Reporting
Gain real-time revenue visibility with every book, at any time and in any location.
Conclusion
Revenue management is no doubt a key function within any business. With so many variables, it’s easy for revenue to be mis-managed, resulting in inaccuracies that give an unrealistic view of a businesses finances. NetSuite offers a robust solution to manage revenue to the most granular level, ensuring all revenue is recorded correctly.
Why choose Eventura to deliver your NetSuite Project?
As an official NetSuite solution provider, we have successfully delivered countless NetSuite implementations. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.
We believe that NetSuite offers its customers a comprehensive suite of products that can digitally transform their businesses, replacing a range of disparate systems and softwares with one unified solution to business management.
If you would like to speak to one of our NetSuite experts, you can request a free call back here.
