For subscription businesses, standard accounting processes related to recurring payments, such as recognizing revenue and compiling monthly financial reports, are less straightforward than those related to non-recurring payments. Recurly’s new integration with NetSuite can help simplify some of the complexity that subscription businesses face in terms of processing recurring or individual invoices and payments. Recurly’s integration with NetSuite will also improve operations and reporting, increase transparency, and ensure auditability and compliance. Different types of subscription businesses face varied financial reporting challenges.
For SaaS companies trying to recognize revenue, the main issue is accuracy in terms of revenue and deferred revenue. Since these companies tend to have customer contracts based on a set term of service (often one year or longer), revenue must be recognized ratably, over the period of the contract, often to the day. The remainder of the contract value will be held as deferred revenue until it is recognized.
For example, suppose a SaaS company has a contract that runs from January 1st to December 31st and the contract is for $1,200. In this case, the company can only recognize 1/12, or $100, of that revenue each month (or approximately $3.28 per day)
But what happens when a contract doesn't begin on the first of the month and needs a custom revenue recognition calculation? Multiply that scenario by hundreds or thousands of customers, and the billing complexity increases. To manage this, many merchants use spreadsheets, which can be inaccurate and are subject to human error. By integrating Recurly with NetSuite, this revenue recognition is automated, reducing the need for manual calculations which may introduce discrepancies. This automation also increases reporting accuracy for any number of different types of transactions.
With huge numbers of customers and frequent adjustments to subscription plans, OTT businesses face a unique set of accounting challenges. The large numbers of plan upgrades and downgrades every month (and significant churn) introduce a great deal of complexity to the billing and reporting processes. Recurly’s billing data is seamlessly integrated into NetSuite to handle the impact to deferred and recognized revenue balances for these complex transactions.
Recurly provides the scalability and flexibility that merchants need to handle large volumes of transactions. The integration with NetSuite ensures that revenue schedules conform to a consistent and repeatable format to generate accurate reports within minutes of syncing the data.
Box of the Month:
For these companies, customer revenue is especially complex as it is based on the type of boxes provided and the period over which they are provided. Revenue recognition may differ based on the type of plan provided, whether on a recurring or one-off basis, or whether acceptance is required from the customer. Box of the Month businesses can have a lot of turnover, so maintaining accuracy in their account receivables balances is difficult.
With Recurly’s NetSuite integration, both the accounts receivable and revenue recognition processes are automated, making reports much easier to generate and more accurate. Merchants are able to see accounts receivable status at a glance, identify which customers are overdue, and calculate by how much.
Recurly + NetSuite = Improved Revenue Management
Recurly’s subscription billing platform supports a wide variety of plan types and options and provides the tools to streamline complex billing scenarios. Recurly’s new integration with NetSuite extends the value of our platform by enabling merchants to accurately manage recurring revenue and to use NetSuite’s best-in-class, GAAP-compliant revenue recognition engine for their billing data.
To learn more about this integration, contact us.