RevenueRecognition.com Survey Finds Majority of Public Companies Unable to Finalize Revenue Numbers on Time

Companies Rate Revenue Recognition Among Top Three Ongoing Control Risks

A recent survey by RevenueRecognition.com and IDC of senior financial executives from 578 companies, found that fewer than half are able to manage revenue reporting within their normal monthly close process.

"This finding is symptomatic of companies not investing in revenue management processes in proportion to the complexity and importance of the problem," said Gottfried Sehringer, executive editor of RevenueRecognition.com. "Other complex financial data is readily available from enterprise financial reporting systems, but revenue–the biggest and most visible number of all–slips through the cracks. To compensate, companies are using spreadsheets, in spite of the fact that they identified spreadsheet use as one of the top challenges to ensuring their revenue policies are being applied accurately and consistently."

Revenue numbers are being adjusted up to three weeks after the official monthly close primarily because transactions are becoming more complex and revenue accounting data is not available in time. Financial personnel require more time to review contracts and to apply the proper accounting guidelines. But they frequently are not receiving the necessary information until after the fact.

"The fact that complex transactions are the leading cause of delay in revenue reporting is a clear sign that underlying processes and systems have not kept up with changes in the business environment," said Kathleen Wilhide, Research Director, GRC and BPM Solutions at IDC. "Enterprise standards for revenue reporting processes have not evolved to the point of best practices, but they must because manual approaches cannot ensure the accuracy and availability of revenue data within the standard financial close timeline."

The survey was conducted in June 2007. In all, responses were accepted from 578 high-ranking finance executives 80% of whom are CFOs, controllers, and senior finance, audit, and compliance managers. To read the full report, click here.