Solving for the rev rec complexity of modern business models
I recently had the pleasure of speaking with Jeff Johnson, Managing Director in the Consulting Services Practice at EY, and he shared about his top three areas of focus when working with clients, why accountants should take a seat at the table much earlier in the process, how to thoughtfully look at new business offerings through XaaS, and why it’s more imperative than ever to build a case for automation to reduce overall cost and increase efficiency.??
Key takeaways
The top three areas of focus when working with clients
Picture this: all industries are now introducing Everything-as-a-Service (XaaS) models. It's not just a trend; it's the way forward. Jeff shared an illuminating example from the area of MedTech. Gone are the days of traditional product sales; now, it's all about offering services bundled with products. It's a big shift, and accountants need to adapt.
For accountants, this means understanding the intricacies of XaaS models, including subscription billing, revenue recognition, and customer lifetime value. Being well-versed in these areas is no longer a bonus; it's a necessity to provide meaningful financial guidance to clients navigating this transition.
“What's interesting is the companies that aren't tech companies that are introducing technology products to connect, say equipment, with value added services and software on top of it. And all of a sudden now they look like all the big tech companies that are selling hardware, software, and services…And a lot of? them are a bit challenged in understanding all the nuances and things that the tech companies just know like the back of their hand [because] they do it all the time. These other organizations are learning it. And so there's the learning curve going through it and the automation side, the operational side of making sure you collect the data and you can do the accounting.”
In the digital age, data is the currency of business, and Jeff pointed out a critical challenge: the upstream data mess we’ve all seen. Before you can crunch numbers and extract insights, you need clean, well-organized data. It's here that accountants can play a pivotal role.?
“I think a lot more data capture upstream can be automated. Just it's really tracing it back and saying, here's where we first cap. We know about the data, let's capture it and flow it downstream so the accountants don't have to do it at month end. That data then becomes available for reporting and metrics and analytics.”
Traditionally, accountants have been seen as the professionals who swoop in when the numbers need to be crunched or the taxes need to be filed. Jeff challenges this passive role, and his advice is clear: get involved early, with or without an official invitation. Collaborate with your client's teams, especially during the crucial data collection and organization phase.?
Your financial acumen can streamline this process, ensuring that the data you work with is accurate and reliable. Your financial expertise is a valuable asset. By actively engaging with your client's teams, you can provide insights and advice that can shape important business decisions. You wouldn’t be where you are otherwise.
“Don't wait for the invitation, because a lot of time the other organizations just don't know. They don't know what they don't know, so they would never even think they should invite you to the table to have a conversation.”
Building a business case for automation: the power of technology
Automation is the buzzword of the decade, and for good reason. It's not just about efficiency, but about staying competitive and having an edge. Jeff emphasized the importance of building a strong business case for automating processes with technology, because when you automate, you're not just saving time—you're saving money.?
You don't have to constantly grow your headcount to keep up with increasing workloads. This is especially crucial in an era of evolving growth and pricing models. Accountants should be at the forefront of identifying where automation can bring the most significant benefits, whether it's in accounts payable, financial reporting, compliance, and beyond.
“If I'm adding 2, 3, 4, 5 headcount, it's probably the wrong answer. I need a better tool in place because now I'm challenging my controls, my ability to be accurate. Still close the books in say four days, and then give me all the detail I need out of that revenue results to satisfy, say tax reporting, tax returns with revenue by jurisdiction…So that's where the use cases tell the story. And I always say, look, let's build the use cases. Build them based on your profile.”
About the author:?
Em Daigle is the VP and General Manager of Zuora Revenue. As a former revenue accountant turned tech executive, Em has always been fascinated by the intersection of accounting and technology. Her mission is to empower every corporate accounting team with the latest technology that enables completeness, accuracy, and real-time revenue visibility, while getting accountants out of “Ex-Hell” and allowing them to focus on analytics and business partnering.
Follow Em on LinkedIn for insights that help accounting leaders evolve their career, modernize their teams and become more influential partners to the business.
Customer Experience Leader with AI | Transforming Experiences in Cloud, SaaS & Hybrid Environments
1 年Cool article!