SaaS companies face some unique challenges in revenue recognition, especially under ASC 606. Manual processes and tools like spreadsheets often fall short and can’t handle the complexity and scale of modern SaaS operations. Here are six best practices to help you streamline revenue recognition using automated SaaS accounting software.
Ensure Compliance with Revenue Recognition Standards
To ensure compliance with ASC 606, it’s essential to follow the five-step revenue recognition model – identify contract, identify performance obligation, determine the transaction price, allocate the transaction price and recognize revenue. Choosing a well-configured system can automate each step, ensuring the process is consistent, accurate, and is not manual.
Automate Revenue Recognition Processes to Reduce Manual Effort
Manual data entry is time-consuming and error prone. Implementing an intuitive, automated system streamlines data entry and validation and significantly reduces manual effort. Compared to traditional spreadsheet-based methods, such systems enable faster closing and save time.
Strengthen Security Through Segregation of Duties
Strong internal controls are essential for financial integrity. Define user roles and access levels to ensure proper segregation of duties. For example: one user might handle data imports, another configures item settings, while others manage billing, revenue recognition, or review entries that are posted. The layered access model enhances security, accountability and reduces risk.
Improve Financial Reporting with Single Source of Truth
Relying on Excel often means your data is stuck in silos, only accessible to the person who built the spreadsheet. That makes it hard to share insights consistently across the team. Use a system with built-in APIs and robust reporting tools to enable the creation of a centralized, single source of truth, ensuring that all stakeholders access the same real-time data. It’s a more scalable way to keep your reporting consistent and eliminate redundant reporting efforts.
Standardize Controls for Auditability
Use pre-built configurations and defined rules to ensure consistent revenue recognition across all deliverables. Maintaining change logs, audit trails, and using repeatable templates reinforces data integrity and supports compliance. Structured processes reduce errors, simplify audits and enhance the reliability of financial reporting.
Scalable Revenue Recognition for SaaS Growth
Choose a revenue recognition solution that scales with your business. Whether you’re expanding your customer base or adding new revenue streams, it should be able to support your growth and handle data easily without performance issues. A scalable platform ensures long-term efficiency and supports business agility.
How Does Tensoft Revenue Lens Help Your Business
Tensoft Revenue Lens is purpose-built to meet the evolving needs of SaaS finance teams. By automating complex revenue recognition processes, ensuring ASC 606 compliance, and providing real-time visibility through a centralized data platform, Revenue Lens empowers organizations to scale confidently.
Contact us to schedule a demo today!