Channel Revenue Management
Revenue management after the sale, is a substantial issue for companies that sell through the channel. This becomes even more complicated when products and services sold through the channel are bundled together under a single contract.
Complicated pricing schedules, multiple currencies, percent complete, VSOE (vendor specific objective evidence) are some of the capabilities that must be supported. In addition revenue-recognition rules dictated by the AICPA and SEC and guidelines such as EITF 00-21, SOP 81-1, SOP 97-2, SOP 98-9, SAB 101 demand increasing diligence on the part of accounting staff to ensure compliance and pass audit.
Unfortunately the majority of existing ERP and accounting software packages don't accommodate the complex revenue management and compliance needs of these companies. This has forced them to manage revenue offline by scheduling, allocating, and recognizing revenue outside the company's financial systems using complicated spreadsheets and manual processes.
As a consequence determining the impact of sales on multiple elements, future recognition schedules, and G/L accounts to determine how sales will flow through deferred revenue into a company's financial statements becomes a labor-intensive and error prone job that ends up being undocumented and hard to audit. And as these companies' grow, and their business models evolve to meet the needs of new markets and customers, they find that spreadsheets and manual processes fail to accommodate their needs in a scaleable cost effective fashion.
Entomo's SmartHub on-demand software solution addresses this problem by eliminating complex spreadsheets and replacing them with a single integrated system. By implementing Entomo's solution customers can easily manage complex channel revenue models that are a nightmare for spreadsheet based manual processes and even more traditional systems, especially when it comes to managing deferred revenue, contract renewals, and issuing complex invoices.
This significantly reduces the time and cost associated with revenue management at the same time providing unprecedented visibility into associated revenue related business processes throughout their lifecycle. As a result customers can easily understand their true revenue position, better manage billing and receivables, and ultimately, improve cash flow and accuracy of revenue.
Equally important is the fact that Entomo's solution includes automated functionality to meet stringent SEC and FASB guidelines on revenue, so implementing it substantially simplifies a company's ability to meet Sarbanes-Oxley and other regulatory compliance.
Finally, because all revenue related information is aggregated, interlinked and stored in a single system with built in audit-trails and automatically enforced controls, the audit and analysis processes is quick, easy and always based on high quality data.
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Revenue Recognition (VSOE, EITF 00-21, SFAS 48)
Automated booking and recognition of channel revenues including
sell-through, sell-in, consignment or combinations in the
appropriate fiscal accounting periods, according to appropriate
accounting practices and regulations. A detailed audit trail and
associated reporting tools are provided to support visibility into
the whole process
Also included is built-in support for VSOE (vendor specific objective evidence) and multi-element agreements that may include bundled line items, tiered pricing, complex discounts, multiple billing methods, and long-term support and maintenance agreements as well as channel specific arrangements like returns, in-transit, stock rotation, right of return, and price protection.
Also included is built-in support for VSOE (vendor specific objective evidence) and multi-element agreements that may include bundled line items, tiered pricing, complex discounts, multiple billing methods, and long-term support and maintenance agreements as well as channel specific arrangements like returns, in-transit, stock rotation, right of return, and price protection.
Royalty and License Revenue
Entomo's channel revenue management solution supports revenues from
both product sales and intellectual property royalties. Support for
royalty revenues includes automatic tracking, reporting,
calculation and invoicing of royalties based on licensee POS and
Inventory reports.
A primary focus of Entomo's royalty management solution is to reconcile licensee reported channel data across multiple level of the manufacturing and distribution chain with calculated values to identify unpaid royalties and gray market activity.
The system accomplishes this through seamless integration with Entomo's channel data services for timely and accurate licensee data feeds. Once this data is received patented reconciliation algorithms analyze the reported data for inconsistencies across licensees and periods so that the inconsistencies can be researched and corrected.
Royalty due reports can then be automatically generated based on the individual licensee's contract, royalty schedules, and terms taking into account sales, inventory or both. This automation significantly reduces the workload of licensing and compliance teams involved in ensuring licensees fulfill their royalty payment obligations and eliminates revenue leakage due to unpaid royalties.
A primary focus of Entomo's royalty management solution is to reconcile licensee reported channel data across multiple level of the manufacturing and distribution chain with calculated values to identify unpaid royalties and gray market activity.
The system accomplishes this through seamless integration with Entomo's channel data services for timely and accurate licensee data feeds. Once this data is received patented reconciliation algorithms analyze the reported data for inconsistencies across licensees and periods so that the inconsistencies can be researched and corrected.
Royalty due reports can then be automatically generated based on the individual licensee's contract, royalty schedules, and terms taking into account sales, inventory or both. This automation significantly reduces the workload of licensing and compliance teams involved in ensuring licensees fulfill their royalty payment obligations and eliminates revenue leakage due to unpaid royalties.
Revenue Forecasting
The SmartHub includes the ability to extrapolate revenue trends and
build "what-if-scenarios" to support strategic planning. This
allows companies to evaluate the impact of changes in future
revenue streams on the P&L. and gain a better understanding of
how today's decisions will impact the future.
Audit and Contract Compliance
The SmartHub software supports compliance with revenue recognition
rules (SOP 97-2, 98-9, 81-1, VSOE, SAB 101, and EITF 00-21) and
other regulatory mandates. It also provides a built-in
transactional audit trail for SOX 404 assertions to create a solid
foundation for robust internal controls over revenue processes.
Financial Reporting
Integration with existing business systems is supported through the
automatic generation and export of G/L adjustments for Revenue,
COGS, Inventory and Deferred Revenue.
Warranty Returns and Stock Rotation
Entomo offers manufacturing companies a complete solution to
simplify and automate the warranty returns and stock rotation
processes including elimination of discrepancies between contracted
rotation levels and actual rotations. The solutions includes online
collaboration on return material authorization (RMA) requests and
their disposition as well as tracking of receipts and the automatic
generation of credits.