New revenue recognition compliance required a full-scale change
It was clear from the beginning that the new revenue recognition accounting standard would have a big impact on processes, people, and systems. But, just how big? That’s what a top-rated global software company wanted to know. With over $2B in annual revenue and a variety of business models serving a high volume of clients and users, putting new processes in place was no small task. An automated solution seemed to be the right path, but given the company’s complexity, even selecting the most appropriate system represented a challenge. And with significant impact expected across the company, completing the revenue adoption by the mandated adoption date wouldn’t be easy. Compliance required a comprehensive solution.
“It was rewarding for PwC to support the CAO and other business leaders across the company over the course of the implementation and assist them with compliance with this new and highly impacting standard. Revenue automation is new territory for many companies, and we’re pleased to have had the opportunity to share our experience to help the company implement this solution and enable greater future agility.”
Increasing efficiency and enhancing reporting with an automated solution
An initial company Rev Rec analysis identified their impact was “more than insignificant”, at least from a process, systems and data perspective. To confirm the company’s assumption, PwC’s Risk Assurance and Capital Markets Accounting Advisory Services (CMAAS) teams were invited to assist with an assessment and identified the impacted revenue streams and business processes. When the assessment was complete, the company’s Chief Accounting Officer (CAO) concluded that help was needed, with an implementation approach tailored to their needs. With the advice and assistance of professionals from our assurance, advisory and tax services we aided in evaluating possible solution options, resulting in the selection of an automated revenue process and reporting solution.
Next, working closely with the CAO and functional leaders across the company, the solution implementation efforts began. The solution was designed, built and tested to align with requirements of the business. Given the magnitude of the impact, PwC professionals from people and change were involved and executed a full-scale change management plan. They addressed questions such as: (i) What would the impact be, not only on accounting and reporting, but on sales, order processing and service delivery? and (ii) How would the transformation in business processes be communicated to the impacted teams? Thinking about this holistically across the company, as opposed to narrow silos, was one key reason the CAO chose PwC for this project.
The system was implemented, and although successfully crossing the compliance finish line was one objective that was met, optimizing the solution was still a work in progress. Turbulence along such a complex journey is not unexpected and helping the company plan for the “optimize phase” was essential as the company took back the reins. Collaboration, flexibility and commitment to the solution were key success factors and the company soon crossed the optimize finish line as well. As expected, automating revenue recognition is bringing benefits that extend well beyond meeting the deadline for compliance. Reducing manual processes, increased efficiency, and automation will improve control and enhance reporting. With a scalable solution in place, the company now has a platform to optimize the business process and to grow as new business models evolve.
A scalable solution paves the way forward
Meeting the deadline for adopting the new revenue recognition standard turned “compliance” into a “foundation for the future”— an opportunity to benefit from greater efficiency and enhanced reporting as the business continues to innovate and grow. What’s more, automating revenue recognition has provided a scalable solution capable of handling any number of changing business models or levels of complexity. In the world of technology where innovation and change are inevitable, the company is better positioned for whatever comes next.
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