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Struggling to keep your revenue recognition practices consistent? NetSuite’s Advanced Revenue Management (ARM) module allows businesses to automatically recognize revenue according to set rules and conditions like delivery milestones and contract terms.
With this feature, businesses can also handle intricate revenue setups that involve various deliverables, flexible payments. It gives them tools to define and report on revenue arrangements, making sure everything is in alignment with accounting standards.
In this article, we’ll dive deeper into NetSuite ARM to give you more insights as to how this could benefit the way you do business.
What is NetSuite Advanced Revenue Management?
To put it simply, NetSuite ARM is a module within NetSuite ERP designed to automate your revenue recognition processes. It helps businesses adhere to complex accounting standards such as ASC 606 and IFRS 15 by automating the recognition of revenue based on rule-based criteria. Essentially, NetSuite ARM ensures that revenue is recognized accurately and in compliance with regulatory requirements resulting in reduced manual effort and errors.
Why NetSuite ARM is Crucial for Your Business
NetSuite ARM is a pivotal asset for your business. As your business dynamics evolve, consistently achieving accuracy and compliance can become increasingly challenging. NetSuite is a dependable solution in streamlining your revenue recognition tasks and minimizing the risk of errors. With NetSuite ARM, you can optimize revenue recognition, streamline contract management, and generate comprehensive financial reports.
NetSuite ARM Modules
NetSuite ARM comprises several essential modules designed to address different aspects of revenue recognition and NetSuite financial management. Let's explore the NetSuite revenue recognition module:
Contract Management
Efficiently handle your contracts from start to finish. NetSuite contract management module lets users keep track of contract details, renewal dates, and when revenue should be recognized to make sure your contract obligations are always met.
Revenue Recognition
Automatically recognize revenue in line with accounting standards. Users can set up rules for recognizing revenue based on things like when products are delivered, services are performed, or certain contract terms are met.
Financial Reporting
Gain access to powerful reporting options to analyze revenue and financial performance. This module offers customizable reports and dashboards that provide insights into revenue trends, profitability, and important financial metrics.
Revenue Arrangement Management
Handle complex revenue situations more effectively. Users can define revenue arrangements that involve multiple items, flexible payments, and potential changes in revenue.
Optimizing Complex Allocations
Distribute revenue and expenses accurately across different areas like products, services, and departments. Users can establish rules and methods for revenue allocation and expenses based on specific criteria.
Revenue Scheduling
Create revenue schedules based on contract terms and performance obligations. It helps users plan when revenue should be recognized over time, considering factors such as billing cycles and payment terms.
Key Capabilities and Features of NetSuite ARM
Here are the key capabilities and features of NetSuite ARM:
Multiple Revenue Models Support
NetSuite ARM supports various revenue recognition models to accommodate different business requirements. For example, you can recognize revenue based on delivery milestones, usage-based metrics, or subscription models to adapt to diverse revenue scenarios.
Flexible Revenue Recognition Capabilities
NetSuite ARM also offers flexible revenue recognition capabilities. You can customize recognition rules based on specific criteria like performance obligations, contract terms, and revenue streams.
Comprehensive Contract Management
Easily manage contracts throughout their entire lifecycle. NetSuite ARM provides tools for contract creation, tracking, renewal, and compliance monitoring for centralized contract data.
Advanced Financial Reporting Tools
Generate comprehensive reports and analytics related to revenue recognition and financial performance. With customizable dashboards, real-time insights, and drill-down capabilities, users can gain visibility into key financial metrics.
Revenue Arrangement and Allocation Optimization
Define complex revenue arrangements involving multiple deliverables, variable consideration, and contingent revenue streams. The system also allows for equitable allocation of revenue and expenses across different dimensions of financial reporting.
Revenue Scheduling and Forecasting
NetSuite ARM automates revenue forecasting effectively. Users can create revenue schedules based on contract terms, billing processes, and performance obligations.
Best Practices for Implementing and Using NetSuite ARM
NetSuite ARM is a handy tool for handling tricky revenue recognition in NetSuite. To make the most of NetSuite ARM, it's important to plan carefully and stick to some key practices. Here are 5 simple tips for using NetSuite ARM effectively:
Enabling and Configuring ARM
To start with NetSuite ARM, ensure you enable and configure the new module correctly. This involves activating ARM within your NetSuite account and setting up initial configurations to align with your organization's new revenue recognition requirements.
Setting Accounting Preferences
Define your accounting preferences within NetSuite ARM. Configure settings related to revenue recognition methods, revenue recognition start dates, and other accounting parameters to ensure accurate and compliant financial reporting.
Establishing Revenue Recognition Rules
Create clear and comprehensive NetSuite revenue recognition rules that reflect your organization's revenue recognition policies and adhere to accounting standards such as ASC 606 and IFRS 15. Define criteria for recognizing revenue based on delivery milestones, contract terms, and performance obligations.
Item Addition and Management
Manage items efficiently within NetSuite ARM to streamline revenue recognition processes. Add and maintain products, services, and other revenue-generating items accurately to facilitate seamless revenue recognition and reporting.
Revenue Recognition Field Mapping
Map revenue recognition fields accurately to ensure data integrity and consistency across your NetSuite account. Align revenue recognition fields with corresponding financial and operational data points to maintain accuracy in revenue recognition processes.
Updating Revenue Recognition and Revenue Plans
Regularly review and update revenue recognition and revenue plans to reflect changes in business dynamics, contractual terms, and regulatory requirements. Keep revenue recognition schedules and plans up-to-date to ensure timely and accurate revenue recognition.
Scheduling Regular Revenue Recognition Journal Entries
Establish schedules for generating regular revenue recognition journal entries within NetSuite ARM. Set up automated processes to generate journal entries at predefined intervals, facilitating efficient revenue recognition and accounting practices.
Conclusion
In conclusion, NetSuite's ARM module offers a robust solution for maintaining consistent advanced revenue recognition practices. It automates NetSuite revenue recognition based on predefined rules and criteria, easing the complexities of accounting standards such as ASC 606 revenue and IFRS 15. NetSuite ARM optimizes revenue recognition, contract management, and financial reporting, minimizing errors and ensuring compliance. With its key modules like Contract Management, Revenue Recognition, Financial Reporting, and others, businesses can efficiently handle intricate revenue scenarios and allocate revenue accurately. NetSuite ARM's customizable revenue recognition features and comprehensive reporting tools empower organizations to streamline your business and revenue recognition processes effectively. By implementing best practices businesses can maximize the benefits of NetSuite ARM and achieve greater efficiency in revenue recognition.
