Invigorate YOUR software company! Leave the manual workarounds behind!
Often, accounting departments – and accountants – live true to their nature and perform functions in the least expensive way possible. This is not always the best way to perform, however. Considerable time, effort and momentum can be lost by performing redundant tasks or performing tasks less efficiently. Over time, however, the accounting staff begin to accept their fate as “the way it has to be because of those %&$*#$! VSOE rules!” Seldom does anyone stop to consider what “could be” or what other options exist.
Take, for example, the case of a software company that develops escrow management software for the realty industry. This company produces a product and has a professional services staff that implements the software product. In recent years, the company has begun to sell the product and the implementation in a fixed-price bundle to be more competitive with other vendors in the same market space. While that simplifies things for sales, it immediately presents issues and more work for the accounting department.
Good news: Great Product Bundle Selling.
Bad News: Things are More Complicated in Accounting.
Bundling services and products together in a single purchase introduces an accounting concept called Vendor Specific Objective Evidence, or VSOE for short. VSOE is not an overly complicated method of revenue recognition – IF you have the right software to manage it. If you do not, it can become a nightmare! Really!! You may have vivid, colorful, highly disturbing dreams about it!
VSOE – Shouldn't the Software Handle That?
Okay, okay, so you won’t have nightmares – probably – but you will spend countless hours updating spreadsheets – multiple spreadsheets – just to keep your revenue amounts correct. Why bother with all of that hassle?
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