If you are similar to a lot of software companies who need to track deferred revenue, you’ve probably at some point created a complex spreadsheet to aid in the process. As your company grows you start to feel the pain of maintaining the spreadsheet in conjunction with your accounting system. Here are some signs that you have outgrown your Excel spreadsheet for tracking revenue recognition:
1. You no longer enter individual journal entries in your accounting system
Your revenue recognition spreadsheet is a work of art. You have tediously spent hours in Excel creating formulas to accurately calculate revenue recognition schedules for your business. You are able to track each customer and each subscription that you have sold. At the end of every month you log in to QuickBooks and proceed to create journal entries for each of your hard earned customers.
Eventually, as your company grows, it is not feasible to manually enter each journal entry individually. You decide to sum up all of the earned revenue for the month and enter it as a single journal entry.
You have now lost details about which customers and which services/products the revenue is attributed to. You have lost the ability to report that detail from your accounting system.
2. Reporting revenue requires combining reports and spreadsheet data
It’s time to run a P&L report or A/R aging report and you’re forced to pull of your revenue recognition spreadsheet for some of the details. Without finer details of each customer and product/service you’re having to rely on data from your spreadsheet to complete your report.
3. You are not able to view a timely snapshot of your revenue
It’s the end of the month and you start pulling reports from Salesforce, Stripe, or some other system to get a clear picture of your new revenue. You use this information to start entering new business into your spreadsheet. What happens when you need to get a snapshot of your revenue mid month?