Understanding the Importance of Controlling Costs by Integrating Finance Processes

To kick off our new blog series, "Is your billing system the best it can be?", we address the importance of controlling costs by integrating a strategic finance process.

Controlling costs isn’t just the finance department's responsibility in any organization. As technology improves and revenue operations become more sophisticated, every department contributes to controlling costs and adding revenue. Businesses must integrate financial contributors and automate processes to reduce errors, speed time-to-profit, and maintain the cost of revenue management.

Integrating financial processes opens new opportunities for any organization. Automating revenue operations cuts costs and gives every department more responsibility for managing expenses and adding to the bottom line. This post will review strategies to automate revenue processes and control costs while gaining other benefits.

Cost Drivers Behind Revenue Recognition

Any organization can cut costs for revenue operations once they understand what drives those costs. Several factors contribute to higher prices for revenue operations:

• Repetitive tasks such as data entry
• Errors that require costly rework
• Inflexible processes that can’t be readily modified
• Lack of insight from available revenue data

Task-intensive processes such as order management, manually tracking units or services sold, manual booking processes, and other hands-on procedures add to the cost of revenue operations. Manual billing, invoicing, collections, and even royalty calculations generate errors and slow financial processes. Delays in access to time-sensitive data and reporting on business processes also make it challenging to identify inefficiencies.

Errors also drive up compliance costs. Mistakes in manual data entry, calculating revenue, and reporting sales tax add to revenue operations costs and cut profits. Delays in accounting close also add up. Often it takes weeks to close the accounts and requires long hours from multiple team members. The stress and frustration add to the mistakes.

Factors Driving Costs Higher

Revenue operations evolve, and not necessarily in an efficient way. Businesses cobble together sales, billing, collections, customer management, and financial functions based on the immediate needs of different stakeholders. No one takes a holistic view. Disconnected business systems and pervasive manual processes create additional delays and headaches as organizations ramp up to embrace digital commerce.

The proliferation of siloed solutions across revenue operations contributes to unnecessarily high revenue operations costs. When systems are integrated, data cannot be shared, and more people must manually enter data in different systems. The result is higher labor costs and increased risks of manual errors.

Continued reliance on spreadsheets adds to labor costs and compliance risks. Not only do spreadsheets become increasingly complex, time-consuming, and prone to errors, but they are also expensive to audit. Add complex revenue recognition and recurring revenue sources and costs and risks from manual revenue management compound.

Essential Elements to Cut Costs

In the digital economy, every gain in efficiency gives you an edge. Regarding revenue operations, efficiency and agility start with integrated and automated processes. Integration and automation drive better reporting and greater insight throughout the value chain.

Automation requires optimizing and automating existing manual processes to reduce errors and increase efficiency. Integration involves interconnecting disparate back-office systems to better manage revenue flow and customer relationships. Timely reporting delivers real-time insight into business operations and requires automation and integration for effective reporting. Integrating and automating key processes provides immediate efficiencies, reduces errors, and controls headcount. It also lays the foundation to continue to refine processes moving forward.

To illustrate the benefits of integration and automation, let’s consider a leading e-commerce company with multiple business units. The company needed to cut costs and increase organizational flexibility. The company also used different billing, invoicing, collections, cash management, and revenue reporting systems and had several order-to-cash teams.

The company decided to migrate revenue operations under a single leader and move processes for individual business units to a common platform to handle invoicing, remittance, collections, and revenue reporting. The company saved $1 million on finance department expenses by standardizing and automating invoice process and delivery. The company also recognized a $15 million improvement in accounts receivable. The result was a positive impact on profit and loss of $800,000.

Combining Integration and Automation with Flexibility and Scalability

When considering how to integrate and automate existing revenue processes, choose a flexible and scalable approach to deliver optimal value over time. Software-as-a-service solutions can be more efficient, scalable, and strategic and can automate revenue operations without spending more to maintain an in-house solution. To maximize returns and keep costs in check over the long run, look for a solution that can deliver the following:

• Support current business needs with the flexibility to adapt to evolving processes.
• Ingest and process events in real time.
• Integrate with other essential systems so data flows quickly and smoothly.
• Automate revenue recognition rules to book revenue correctly the first time.
• Enable visibility in the entire revenue operations system to provide intelligence about the business and reveal areas that need improvement.

Choosing the right agile billing platform is a serious endeavor. At Gotransverse, we understand what's at stake and are dedicated to providing our clients with the support they need to achieve their growth goals. Our platform is built to handle highly complex transactions at hyper-scale billing volumes, and it's as configurable as they come, making it easy to pivot on a dime as the market and customer demands continue to evolve. To learn more, we invite you to take a virtual tour of our platform today. Then, when you’re ready, request a complimentary demo to talk with one of our experts about whether Gotransverse is the right billing partner for your organization.