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Ali Rizvi

5 min

Article Automating Revenue Recognition to Benefit from 84% in Monthly Time Savings!

Studies show that 97% of businesses agree that automation using the latest in productivity tech is important for the long-term success of their business, yet only 31% of companies are currently leveraging some form of automation. Does this surprise you?

For all you accountants out there, understanding the benefits of automation including reducing the risk of financial misstatements, closing the month-end out quicker, connecting data sources, and generating insights are key areas that can help save time in your business.

Why is Revenue Recognition Important?

Revenue recognition is important for both internal and external reporting. ASC 606 requires SAAS businesses to recognize revenue once the performance obligation is satisfied, which is generally when the service is transferred to the customer. IF, you get paid upfront before delivering the service, then you will have deferred revenue to account for. More often than not, small businesses are accounting for this situation on a cash basis (ie when cash is recieved), which is incorrect.

Moreover, tax returns are normally based on the financial information generated from your accounting software (e.g. QuickBooks Online). You can see why accuracy is hyper important. Errors can cost a lot of money to fix including having to refile amended tax returns, potentially with interest and penalties tacked on.

Does Automation Actually Result in Monthly Time Savings?

Digital transformation is a game changer when it comes to recognizing accurate revenue while saving time. In fact, a recent study shows that 85% of businesses believe that automation processes will give employees extra time to dedicate to more important tasks.

Reduces Risk of Restatements

The risk of restating financial statements not only carries a monetary penalty, but can also take away valuable time from employees. Audit Analytics conducted a survey and found that the average restatement takes an average of 300 days. Spending nearly a year fixing financial statement misstatements drains time from every department in your SAAS business, making automation an important efficiency to consider.

Additionally, Audit Analytics found that proper revenue recognition has been one of the top issues businesses have been facing for the past 3 years with 41 notable citations issued by the Securities and Exchange Commission. This is a significant number considering the SEC only audits a handful of companies. If large businesses that have a dedicated accounting department are having trouble with revenue recognition, think of the impact on SMBs with only a few employees.

Quicker Month-End Close

Revenue recognition automation leads to reduced time spent during month-end close. Quicker output of monthly financials gives decision-makers the ability to base high level decisions on up-to-date and accurate information. Research shows that 87% of firms that have automated AR functions are able to process invoices faster, trickling down into proper cutoff procedures; a major component of accurate revenue recognition. This can help you avoid the 5-10 lag in closing the books out each month.

Quarterly revenue bar chart showing deferred and revenue recognized

Connects Data Sources

It’s not uncommon for SAAS businesses to have different revenue streams, from annual subscription ,implementation and other professional services. When your business is earning revenue from multiple avenues, it can be time intensive to combine the data into your accounting system. Using the right software, your data can be seamlessly combined, eliminating the need for updating countless spreadsheets or creating journal entries that are subject to errors.

Gives Insight into Revenue Generation

Revenue recognition also provides SMBs with the flexibility needed to view the business in different ways, creating stronger insights and analysis. Let’s say that it takes 7 days to close out the month-end with manual procedures and another 2 days for management review. If management comes back with questions on a certain area of revenue, how much longer does it take to uncover the answers?

Software provides the ability to fully utilize the data your business is generating without having to spend days or weeks looking for inefficiencies or answers. This is crucial when trying to scale your SAAS business.


Does it sound like your SAAS business can benefit from automation of revenue recognition? The process of implementing revenue recognition automation into your business doesn’t have to be complicated or take a long time.

Learn more about automation at TrueRev

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