How Tensoft's Revenue Recognition Engine Works

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For companies with complex revenue recognition needs – like software and technology businesses – the revenue and deferral management options in most accounting software don’t come near to solving their needs.  So, resourceful accountants create complex spreadsheets to fill this gap.  The process around the spreadsheet and setting up each revenue transaction – from how to format and allocate revenue on the transaction to the rules appropriate to each line on the transaction – is a manual process and a significant effort that’s not integrated with the company’s business software systems.   So, there’s a natural tendency to over-simplify.  For example, you might lay out the entire revenue plan for the life of the transaction, even if all of the variables that will impact revenue aren’t known.  Or, you might put it in suspense, delaying revenue recognition to be cautious about everything that’s known and reviewed prior to starting revenue recognition.  The bottom line is any company using spreadsheets to manage their revenue is very dependent on the staff    resource(s) who maintains the master revenue spreadsheet, since this controls so much of what drives a company’s business.  Needless to say, that’s risky.

What if there was a way to eliminate the issues associated with manual spreadsheet processes?  What if you could easily automate your complex revenue processes, capturing the right information, formatted as automatically as possible, and then support revenue recognition over the period of time that is appropriate for the revenue?  What if this automated process would support not just a subscription/SaaS billing model, or an enterprise license model, but any go-to-market model, and any combination of go-to-market models?

To do all that efficiently, Tensoft Revenue Cycle Management (RCM) breaks away from the paradigm that accounting systems have used historically.  Here’s a brief video explaining how this works:

Video of Tensoft's Revenue Recognition Engine

The video briefly touches on the concept of the "revenue agreement," a separate document from whatever is used for the sales process, such as an invoice, order, or contract.   The revenue agreement’s job is to understand and recognize revenue appropriately, as an independent and separate process from the billing and sales transaction management process.  This treats revenue as its own important process, which therefore needs its own system document to manage it appropriately.

Because it’s built around the idea of a revenue agreement, Tensoft RCM can easily handle any changes.  It allows changes to be made to the original agreement, and then re-computes revenue so that revenue is always computed appropriately, based on both the original agreement and any subsequent changes.  This allows you to confidently analyze your revenue, knowing that it has been streamlined and that gaps, risks and leaks have been eliminated.

Tensoft Revenue Cycle Management (RCM) brings together the sophisticated revenue recognition, recurring billing and contract management functionality that today's software and technology companies need. To see if your company might benefit from Tensoft RCM, here are a few questions to consider:

  • How much time is it taking you to compute revenue?
  • How confident are you in your recognized revenue?
  • How much time is it taking you to fix mistakes?
  • Are you confident you can find revenue mistakes?
  • How much risk exists related to revenue accuracy?
  • Can you easily forecast and analyze current and deferred revenue?
  • How much do you under-report revenue because you want to be cautious?

Whether your critical business needs are simply for revenue management, or for a longer list of revenue cycle management needs, Tensoft RCM products will help you improve the efficiency and accuracy of your complex revenue management.  For more information, visit our website at or contact us directly.

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