Consolidating Revenue Reporting Post-acquisition: What to Consider
Do you want good, structured, easy-to-report-on data for revenue reporting? It’s not a trick question—of course you do. And after a merger or acquisition, revenue reporting becomes simultaneously more important and more complex.
It’s challenging to combine and unite two organizations. You need to manage change at every level across multiple dimensions: people, systems, data, process, and governance. There’s pressure to show a return on investment from the transaction. But without accurate reporting, you can’t demonstrate your progress to your PE company or your board.
CPQ is the Solution to Revenue Reporting Challenges
At OpFocus, we know that having accurate reporting is critical to making better decisions. You need a solution that forces consistency and ensures you capture the right data. After helping dozens of high-growth SaaS companies, we’ve determined that one of the most crucial requirements to guarantee high-quality revenue reporting is to implement a configure-price-quote platform such as Salesforce CPQ.
Keep in mind, however, that a platform is only as good as the infrastructure that supports it. CPQ is a highly customizable solution, even out of the box. The way you set up CPQ can significantly impact the data generated for revenue reporting and its subsequent value to your organization.
Setting Parameters for Revenue Reporting
As you establish guidelines for your revenue reporting, or re-establish them post-acquisition, think about and assess the following:
Develop clear definitions for each type of revenue “bucket” in your organization. Start by defining the four major revenue categories:
- new business
In a merger or acquisition scenario, be sure to get buy-in from both sides—and don’t assume that their definition of a cross-sell or renewal matches yours.
To get clean, consolidated revenue reporting, you also need to decide how to allocate ARR based on contract terms and timing. How will you handle these scenarios?
- multi-year contracts
- ramping contracts (e.g., a three-year contract that steps up each year)
- pre-sold contracts that begin in a future period (e.g., a subscription that begins 6 months from now)
- free or trial periods (does the first year include the trial or begin after it?)
Developing clear bookings policies will prevent you from undercounting or overcounting ARR as well as ensuring your revenue is classed correctly for reporting purposes.
The question “How many customers do we have?” isn’t as simple as it sounds. First, you need to determine how you count customers. Is each new transaction line a separate customer? Maybe you prefer to count logos instead.
Once you determine what qualifies as a customer, make sure that definition is reflected in how you set up and use Salesforce CPQ.
Design a Solution that Works for You
This piece has intentionally presented considerations rather than prescriptions to help improve the quality of your revenue reporting. There’s not one “right” answer when it comes to distinguishing upsells vs. cross-sells or handling ramping contracts. Your organization’s unique needs will determine which options work best for you.
What is extremely important, however, is that you maintain consistency with your selections. Meaningful reporting can only be produced with accurate data. And in a post-merger integration period, the pressure is on—not only to grow but also to demonstrate that growth to your stakeholders. If you’d like to learn more about presenting revenue reporting data, check out our recent article, How to Prepare for Your Next Board Meeting.
Are you planning an acquisition and know you’ll need some support? Contact the OpFocus team today to see how we can help.