A Fresh Look at Revenue Management for the Manufacturing Industry

The survey "The New World of Revenue Management," conducted by the Institute of Management Accountants and cloud enterprise resource planning (ERP) provider FinancialForce, has been making waves across all sectors of the business world. After surveying 6,000 accountants and financial professionals, CFOs, and senior managers, the Institute of Management Accountants and FinancialForce reevaluated how they assess their revenue management practices in response to new market conditions.

The survey found that as the business landscape changes with a service-centric mind-set, the manufacturing industry, along with other industries, is exploring sophisticated technology to advance accounting practices from merely using spreadsheets to using purpose-built applications.

New Business Models

New categories of business models are garnering attention because they can have a positive influence on a business's valuation. The new business models include software subscriptions, recurring billing, professional services, and product and service bundling that encourage revenue growth. The models, however, require new billing and revenue recognition procedures to track what can be recognized and when tasks are better served by technology beyond spreadsheets.

Notable findings from the survey are as follows:

Recurring Revenue

Raphael Bres, general manager for financial management applications at FinancialForce, said that we are in the "midst of the as-a-service economy boom, which is making recurring revenue the central model of new and traditional businesses."

Bres concluded that "CFOs and senior management teams are at a crossroads and must address these major shifts or risk being noncompliant, inefficient and, worse yet, losing market share for failing to give customers new billing models." The survey stressed the importance of adopting a strong revenue management application that not only helps companies gain a predictable revenue stream and superior customer and revenue forecasting analytics but also automates complex accounting requirements.

Where does your manufacturing company fit into this new environment? Give us a call today to discuss revenue management for your production facility.