How much are your manual reconciliation processes costing you in time? Uncollected cash? Increased staff costs? It amounts to more than you think. 

According to a PWC report, 30 percent of your finance team’s time is spent on manual reconciliation. Even in top quartile companies, analysts spend 40 percent of their time gathering data, not analyzing it. 

Optimize the reconciliation process for sales and finance teams

Business managers often focus on supplying their sales teams with the tools they need to optimize the buyer’s journey. But they often overlook the advantages of an updated, automated system that enhances interdepartmental functions, particularly those of your sales and finance teams. Here’s an example:

I spoke with a company that was preparing for a CPQ and billing transformation. The finance team was spending lots of overtime every month before billing cycles just to make sure the invoices going out actually reflected what had been sold, fulfilled, and adjusted. There were some usage elements to their offering, as well. One junior member of the finance team mentioned in our meeting that he had worked until 3 am the previous two nights just doing manual reconciliations. Because of all this, they were evaluating growing the finance team to reduce burnout.

The CFO was present in the room and wasn’t aware that this was happening at all, let alone every month. There was a disconnect between the upstream and downstream systems. The finance systems couldn’t reflect the reality of what the sales teams were selling from their CRM. Terrifyingly to the finance team, products were in the process of being overhauled again. New pricing was about to be released. New bundles and offerings were going to hit the market soon, as well, but the financial systems were legacy systems that were very difficult to update. The manual reconciliation time was only about to get worse. The solution to this problem was not to add more people to the team but to fix the issues causing the discrepancies between the CRM and finance systems.

What factors cause this heavy manual reconciliation? Finance is always receiving information from an upstream source: sales processes and contract amendments. Those two sources, if not integrated correctly, can cause downstream discrepancies for finance. Luckily, with the proper planning and tools, you can make sure that the upstream events don’t cause huge downstream reconciliation. 

Legacy systems may add to manual reconciliation costs

If your financial or ERP systems are old and hard to update, you are at risk of increased manual reconciliation time loss. Consider implementing a more modern set of systems such as Salesforce CPQ and Salesforce Billing, which allow the CRM and finance systems to stay in sync and are relatively quick to update because they don’t require an engineering team. “Customers can mix and match their preferred services to build a toolkit that’s right for them. What’s more, certain services are made to work together, complementing each other and maximizing their utility,” explained Ashley Crosswhite, a change management consultant at Simplus. 

Why is it essential to be able to update your systems quickly? Adding a new product, introducing a promotion, bundling products, acquiring companies that have their own product books, adding subscription-based services to a mostly transactional set of products—these happen frequently. They all require a back-end setup to handle smoothly in a system. Many companies have a modern CRM and an antiquated or semi-modern ERP.  Many companies have an easier time updating CRM systems than ERP and other financial systems. 

Suppose a CRM system is updated to accommodate the new revenue stream, but the financial ERP system that controls invoicing, revenue recognition, and financial statement creation isn’t. In that case, the ERP will start getting upstream data from the CRM that it’s not equipped to handle correctly. If this happens with one new revenue model, that may be ok. But add several, and the finance team gets overwhelmed with manual reconciliations to make sure financials and invoices are correct. With each addition of a new revenue model, the company may hit a tipping point where the need for reconciliation increases, requiring more headcount. Your financials must be accurate. But trustworthy data that relies on manual reconciliations increases finance cost, which doesn’t make CEOs happy. It doesn’t solve the problem of needing to go to market with new revenue streams quickly. 

Modern CPQ and Billing tools eliminate the need for manual reconciliation

We recommend implementing modern CPQ and Billing tools that allow you to add revenue models, products, and unique product catalogs in a clean, organized way. Best of all, a new marketing idea can move seamlessly from concept to execution in much less time than if your systems are antiquated or built on different platforms. Legacy system updates that used to take weeks can now be handled in days or even hours.

CPQ handles upstream events and passes the data to Billing flawlessly because they are part of the same system and are designed to work together. If it’s sold in CPQ, Billing handles it. If it’s amended in CPQ, Billing handles it with accuracy.

Automated contract amendments are game-changers for revenue recognition

Contract changes can get complicated. Did the term of the contract change? Did the price change? Is this a subscription renewal with new products? Did the products or services sold get altered? Does this change require proration?  Is revenue being recognized correctly after the change? Was there a change of internal cost to deliver? Were payment terms updated?  A lot can happen upstream. If that information doesn’t flow cleanly to financial systems, finance will have to dedicate valuable time to manually reconcile what happened, usually by reviewing paper contracts or scans to determine what needs to happen from an invoicing, revenue recognition, and financials perspective. 

“Because CPQ integrates powerful capabilities to support the subscription-based model, amendments and renewals can introduce some complexities for your fulfillment team. These complexities come from how you provision upgrades or downgrades, and terminations or cancellations,” said Gilles Muys, VP of Customer Solutions at Simplus. “With the rich data model in Salesforce CPQ, you are fortunately just a few calculations away from providing the right data to your downstream systems.”

If a contract is amended in CPQ, all the data related to the change flows downstream to the billing platform to ensure that the invoices and revenue recognition are accurate. No manual reconciliation time is needed. The customer experience is preserved because any new payment terms or costs that came from the amendment reflect on their invoice. 

What would you do with 30 percent more time in your day? Implementing CPQ and billing adds up to a valuable return on your investment. CPQ increases the speed and ease of selling, enhances the selling experience and the customer experience, and reduces the errors that lead to manual correction and reconciliation.  

If the investment in CPQ also makes reps more efficient, quote with fewer errors, speed up approvals, and bring in more revenue, how much better off will your company be?