Introduction to Revenue Cycle Automation Tools

stockfresh_6006437_business-people-teamwork_resizedIt is easy to generate a compelling business case for revenue software. Recurring revenues, payment timeliness, simplified billing, and pricing approvals are a few ways that contract-to-cash, quote-to-cash, and Configure-Price-Quote (CPQ) solutions create significant value and reduce cost in terms of cash, revenue leakage and human resources.

Value in these cases is often defined in real monetary returns, which means there is a strong business case for these tools. As a result, these tools can be extremely expensive. This is one area where you want to be as informed as possible so that you can choose the right software at the right price.

Three Revenue Cycle Automation Tools

Contracts Management and Configure-Price-Quote (CPQ) tools have been available and evolving for decades. From a change management perspective, these tools can be difficult because they bring enforcement, and your sales force might give some pushback. However, this is because orders and contracts become standardized during implementation, which enforces some discipline on the sales side but makes work easier for everyone.

Middle Office

Revenue management is not back office, and it is not front office either. It is something in between. The term “middle office” describes where their applications operate. Their applications can help sales people and contractors finish the contract and move directly into invoicing, making it easy to add recurring revenues as the contract moves into the back office system.

  • Pricing
  • Configuration
  • Pricing approvals
  • Discounts
  • Recurring revenues
  • Renewal caps

Building a business case for CPQ and contract-to-cash

Automating the revenue cycle provides valuable opportunities. Recurring revenues can build a up a large business case very quickly. If you're $100 million dollar business and you can put in a system that will increase your ability to bill by 1%, you are looking at $1 million annually. After expenses, if you are highly profitable (20%), that means $200,000 per year.

Additionally, there are areas where revenue leakage can be prevented. Financial teams can be significantly more productive when they do not need to deal with Excel -- they can do more valuable things than just pore over spreadsheets.

It is easy to drive a business case for CPQ and contract-to-cash which explains why these tools are priced above other software applications. These vendors know you will earn a great ROI. The price tag might be high, but ultimately, the price is justified. Just be sure you include some of these name brands in your search, so that your pricing estimates are reasonable.

As always, if you have any questions about revenue cycle automation, please be sure to ask us! We would be happy to sit down and discuss our experience with you.