Spreadsheets are a trusted tool of accounting teams everywhere, but they’re only as powerful (and accurate) as the user punching in the numbers. And yet, many modern businesses still rely on spreadsheets to manage the revenue recognition processes opening the door to human error and inefficiencies.

What if your approach to revenue recognition isn’t just slowing your operations but also exposing your business to compliance risks and penalties?

How Recurly Revenue Recognition can help you

Recurly Revenue Recognition provides a flexible, automated solution tailored to meet the needs of any company with a subscription-based offering. But certain industries present unique challenges for revenue recognition. Let’s explore how Recurly caters to the needs of the Software as a Service (SaaS), telecom, and manufacturing industries with tailored use cases.

1. SaaS: Simplifying subscription complexity

The SaaS industry faces unique challenges, including multi-element arrangements, variable pricing models, and ongoing service obligations. Recurly Revenue Recognition is purpose-built to handle these complexities through:

  • Bundled offerings: SaaS companies often sell software licenses bundled with training or support services. Recurly automatically allocates revenue based on standalone selling prices (SSP), ensuring accurate recognition for each component.

  • Variable consideration: For contracts involving usage-based pricing or performance bonuses, Recurly calculates transaction prices dynamically, reducing the risk of revenue reversals.

  • Deferred revenue management: SaaS providers offering quarterly updates or enhancements can rely on Recurly to automate revenue recognition over the life of the contract.

2. Telecom: Managing bundles and incentives

Telecom companies deal with bundled services (e.g., phone plans with devices), long-term contracts, and frequent customer incentives like discounts or promotions. Recurly addresses these challenges with precision:

  • Multi-element contracts: Automatically allocates revenue across bundled products and services, such as devices, data plans, and installation fees.

  • Contract adjustments: Handles contract modifications like upgrades or downgrades mid-term without disrupting revenue schedules.

  • Customer incentives: Accurately accounts for discounts and promotions in revenue allocation, ensuring compliance with accounting standards.

Telecom providers using Recurly can streamline its subscription management process by automating billing for complex bundles while maintaining compliance with ASC 606. This reduces manual effort and improves operational efficiency.

3. Manufacturing: Navigating long production cycles

Manufacturers face challenges like long production cycles, milestone-based billing, and variable considerations (e.g., warranties). Recurly’s robust capabilities simplify these complexities through:

  • Milestone-based revenue recognition: Tracks progress toward milestones and automates revenue recognition as obligations are fulfilled.

  • Custom production contracts: Identifies distinct performance obligations within customized contracts to ensure accurate reporting.

  • Variable considerations: Accounts for incremental costs like shipping or warranties when calculating transaction prices.

Contract manufacturers using Recurly to automate milestone tracking and progress updates for long-term projects reduce compliance risks while ensuring timely financial reporting under ASC 606.

By ensuring compliance, offering flexibility, and automating complex workflows, we help companies streamline their financial processes, reduce errors, and make data-driven decisions. 

Whether you’re a SaaS company, a media company with subscription-based revenue, or any other business using a recurring revenue model, Recurly delivers the tools and insights you need to stay compliant, accurate, and efficient.

Automating the 5-step revenue recognition model with Recurly

Globally-adopted compliance standards, like ASC 606 and IFRS 15, follow a five-step model for revenue recognition. Recurly can automate that process from contract creation to revenue release — here’s how:

  1. Contract identification: Revenue recognition starts with identifying customer contracts. Recurly automates this by collecting data from subscription agreements, billing systems, and CRMs. It tracks all contract updates, like renewals or cancellations, in real time, reducing errors and creating a  solid foundation for subsequent steps.

  2. Identifying performance obligations: Recurly breaks contracts into clear deliverables, such as subscription services or bundled packages. Configurable templates ensure obligations are defined for accurate revenue allocation.

  3. Determining transaction price: With Recurly, complex pricing scenarios, like discounts or usage-based fees, are handled dynamically. Variable considerations are accounted for, ensuring compliance with ASC 606.

  4. Allocating transaction price: Recurly’s allocation engine spreads the transaction price across deliverables based on standalone selling prices (SSP). This supports models like tiered pricing and milestone billing effortlessly.

  5. Recognizing revenue: Recurly automates revenue recognition based on obligation fulfillment. Whether it’s monthly subscriptions or one-time fees, the platform ensures accurate, real-time processing for full visibility into revenue status.

Recurly Revenue Recognition takes the complexity out of revenue recognition. But don’t just take our word for it — here’s what our customers have to say:

 “It is the only platform flexible and sophisticated enough to automate all aspects of ASC 606 requirements. This automated process provides our revenue accounting team with tremendous flexibility to manage all aspects of our revenue reporting and compliance processes,” says Leo Yi, Director of Revenue Recognition at Thryv.

Wrap up

The demands are clear — subscribers want flexibility to use subscriptions as it fits with their lives. Last year, subscription pause usage surged by 68%. But this rise in flexibility presents major challenges to accounting teams responsible for accurately recognizing and reporting revenue each period.

Ready to automate compliance and forecast with confidence? Learn more about Recurly’s Revenue Recognition standalone solution.