Tech companies need to effectively capture and manage their revenue to grow or even remain viable. This is because pricing management issues, poor or manual reporting capabilities and a lack of operational visibility all contribute to revenue leakage. And as a higher volume of customers come on board, the challenges and financial impacts only intensify.
In this blog, we explore the revenue management challenges creating bottlenecks in organisations and highlight best practices to sustain revenue and improve margins for fast-growing tech companies.
Pricing and market volatility
Pricing is a significant revenue and profitability lever for tech companies, particularly when it comes to market volatility. Tweaking prices may seem preferable to optimising business processes to rein in costs, however, both can be actioned simultaneously for further protection against changeable markets. As pricing is not without risk, getting it wrong could result in significant losses in revenue and market share. Effective pricing decisions hinge on technology solutions such as end-to-end price optimisation and management, guided selling with configure-price-quote - CPQ - applications, and business intelligence and reporting capabilities. Solutions like these enable business leaders to navigate complex pricing decisions, make data-led decisions around pricing, promotions and product mix, and minimise the likelihood of damaging customer trust - and their bottom line.
Siloed systems and the customer experience
Siloed and outdated solutions limit operational visibility and prevent resources and information from being shared among marketing, sales, finance, and customer service teams.
Visibility is a critical advantage in a rapidly changing business environment - without it, departments must wait for information to be collated and shared by other departments. As a result, they can't see the status of recent orders or pending contracts, and if there needs to be last-minute changes made to data, efficiency is reduced, and workflows are further delayed. On the other hand, real-time visibility into daily financial performance gives business leaders access to insights needed to control costs, make intelligent investments and achieve revenue goals.
We all know too well, that siloes can create clear friction points. For example, a Forrester employee highlighted their frustration when attempting to upgrade to a premium app service. Misalignment between the revenue function and billing meant they did not automatically gain access to the premium upgrade. Instead, they had to waste time with customer support to resolve the issue. At scale, cases like this can equate to high abandonment and substantial revenue loss. So, if you get billing wrong, you risk the trust you have worked so hard to instil in customers, which could ultimately impact cash flow.
Early-stage tech companies may be satisfied with spreadsheets and entry-level accounting systems. But as they mature, they must deploy cohesive systems to bring together their departments, enabling them to maintain cross-departmental collaboration and gain the ability to spot and fix the numerous friction and drop-off points that eat into revenue.
Identifying revenue opportunities
To compete in the fast-evolving tech world, companies must adopt smart technology foundations that provide agility and flexibility. Solutions that capture data from all corners of the business and allow the end user to take action based on real-time data by immediately capturing growth and revenue opportunities.
Compliance across jurisdictions
We can't talk about revenue management challenges without mentioning compliance, a critical component of operations for tech companies. After all, tech companies must meet the
industry or government regulations and tax codes for the jurisdictions in which they operate or risk substantial fines that eat into profits. This includes preparing necessary reports and meeting deadlines to avoid penalties, fines and additional, costly audits. Automation helps to ensure compliance with accounting standards, government regulations, tax laws and internal policies by consistently applying the appropriate rules and schedules to revenue recognition, depreciation, prepaid and deferred expenses, and other financial processes.
As a tech company, you should constantly look for the right systems to maximise your revenue potential. This means overcoming revenue management challenges by breaking down business silos and managing revenue holistically across the entire company.
Harnessing technology with advanced reporting and analytics will break down the walls between silos to overcome revenue management challenges. For many tech companies, modern cloud ERP technologies answer these needs by providing the tools needed to quickly sense and adapt to customers' ever-changing expectations, innovate at speed and pursue new sources of revenue.
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