With the new IFRS 15/ASC 606 compliance regulations now in place, CFOs need revenue recognition solutions that can handle complex, multi-element arrangements and fast changing product offerings. CFOs can no longer survive in fast paced business environments with a revenue recognition process where you kick off in the morning and sit around waiting for the answer. Real-time revenue recognition reporting is today’s reality. Rajiv Chopra, expert at Aptitude Software explains for Finance Monthly.

I am amazed that in 2018, and with this backdrop, so many CFOs are still not utilizing advances in accounting technology and are overly reliant on manual solutions. Over 75% of prospective clients I am speaking to are still managing revenue recognition accounting with home-grown “band-aid” systems that are reliant on manpower, excel and internal “spaghetti IT” solutions.

These manual solutions, in which the C-suite place their trust, are high risk. There is a high dependency on a select few individuals who are working under intense pressure for sustained periods of time, levels of staff turnover are high, and teams suffer from ‘Excelitus’ and burn out from the boredom of repetitive tasks. The real value of the finance team - providing management with data insights and analysis, is lost.

For example, we saw an $8bn dollar company operating in 160 countries, running 60 plus inventory spreadsheets just to track their sales. It would take 3.5 hours to open these spreadsheets – you can imagine the stress levels when they needed to close the books! Another company was doing 6 million transactions in a quarter, with 19,000 products and running 20 different revenue management systems, just to know where their revenue was. The level of financial risk was frightening with so many opportunities for misses and mistakes.

The question to CFOs and Chief Accounting Officers is why? You’re not saving money when your staff are waiting around for slow systems, correcting errors that shouldn’t be there and spending time on low value, repetitive processes. When we pose this question to CFOs and CAOs, one of the most common answers given is habit. Yet when pressed, they often admit that concerns over cost is often the real reason behind their hesitancy to adopt new technologies and automated solutions.

While the cost of revenue recognition solutions will always depend on the specific profile of an organization, a recent survey from PWC shows that the majority of companies (58% public / 84% non-public) have spent or will spend less than $500,000 complying with the new revenue recognition standards, with implementation costs going up in step with an increased contract volume and complexity (PWC 2018 accounting change survey).

There are several areas where organizations can look to build return on investment, but I believe the human cost of manual revenue recognition is significant and often undervalued by many companies. You just have to look at the high levels of staff turnover in finance teams, also consider the stress levels as they try to close the books manually and deliver substantiated reporting. In their study on the financial impact of staff turnover, Oxford Economics estimates that it costs over $39,000 just to replace a finance employee when you consider the loss of productivity, agency fees, HR and management time.

At our recent RevConnect conference, the benefits of new revenue recognition technologies were described as ‘night and day’ by David Peterson, Revenue Accounting Manager from Ivanti. He explained how, by moving from a spreadsheet-based solution to an automated revenue recognition solution, they had reduced their close from 5 to 3 days, giving his team time to do more analysis and deliver more insights to the business.

Using automation also means finance teams can leave behind all the rote tasks of data download and copy and paste and focus on data insights and analysis. New technologies also encourage innovation and attract technology-savvy talent. A recent survey from the Association of Accounting Technicians revealed that 75% of finance professionals found that using accounting technology has either made their job easier or freed up time for them to concentrate on adding value to the business.

The benefits for CFOs who have embraced new revenue recognition technologies are extensive. Crucially, they have much happier and fulfilled finance teams. They can also take back control of their environment which can result in increased output, better critical decision making, and more business opportunities.

I encourage all CFOs to stop playing catch up, be proactive and reduce the manual processing of revenue recognition. Empower your team to add value to your business, grow as contributing team members and move away from hours of manual tasks that don’t have a place in the modern CFO office. When speaking about his organization’s move to an automated revenue recognition solution, Mark Flournoy, CAO, at Intuit summarized the change perfectly: “We (finance) are actually now in service to enable the rest of the business.”