Tips for Helping Software Companies Overcome 3 Common Challenges

On how software companies overcome 3 common challenges - As owner of a growing software company, you have a vision. Whether you plan to take the company public, or your goal is to offer the dominant software product in your vertical on three continents, your vision most likely involves aggressive growth goals. Will you be ready to scale your business processes when that growth comes?

Software companies often encounter a number of challenges as they grow.

• You may be managing many projects at a time, each of which consists of multiple phases. Often, a disconnect grows between project managers and the accounting group—resulting in lack of visibility into profitability of individual projects.
• The addition of subscription services adds stability to income streams but also introduces complexity in billing and revenue recognition processes.
• Each individual contract may have unique pricing, terms and renewal dates. As the number of customers grows, the spreadsheets that many software companies use to keep track of billing and renewals become more complex, and the process to re-enter and reconcile that information in a separate general ledger is not only inefficient but also error-prone.

The technology you use can play a big role in helping you overcome these challenges. The use of disconnected systems to manage sales, order management, accounting and revenue recognition leads to complexity, inefficiency, unnecessary costs and an incomplete view of the financials. Achieving your growth goals when you don’t have a clear and accurate view of current and future revenue is almost impossible.

Subhead: One Integrated Solution

Software company executives can alleviate many of their growing pains by implementing an integrated suite of business management applications.

• Streamline billing processes. When the entire customer relationship is integrated in one database—from order entry to billing to renewals—you increase staff productivity, reduce IT costs and speed up the order-to-cash cycle.
• Automate and simplify revenue recognition. For software companies, no business management suite would be complete without sophisticated revenue recognition capabilities. Any potential solution should include templates that allow controllers to automatically apply revenue recognition rules to line items in customer invoices. Not only does this automation eliminate the need for standalone spreadsheets and manual reconciliation, it also allows you to have a higher degree of confidence in your compliance with revenue recognition standards.
• Increase visibility into financial performance. When project managers, accounting staff, salespeople and other key stakeholders all work off of the same platform, you can have confidence that your financial data is both complete and accurate.

Every growing software company reaches a tipping point where the cost to maintain separate systems for accounting, project management, billing, sales and marketing is greater than the return on those systems. Making the transition now to an integrated business management suite enables you to rapidly scale your business—from a small privately held company to a publicly held global organization, and anywhere in between.

If you’re ready to accelerate revenue growth, contact us or call 888-773-2123 to learn more about how we can help you find and implement an integrated software solution that will advance, not hinder, your growth.

If you found the above content interesting, be sure to watch our video on:

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