Recognizing the crucial role of finance operations in optimizing a recurring revenue model

By George McLaughlin – EVP Client Success, Salesforce CPQ & Billing

Recurring revenue holds tremendous promise for organizations. At the same time, this new model has introduced significant complexity across the business, with much of the burden falling on Finance.

Once a standalone function, finance operations must evolve to manage an endless stream of increasingly complex sales and monetization models, as well as a long list of associated tasks, such as upgrades, add-ons and swaps. At the same time, Finance must also ensure that new revenue recognition rules and regulations are met.

Manual processes, once used as “quick fixes” to address these issues in the short term, are not an effective long-term solution. Further, in today’s highly volatile environment, strengthening and modernizing finance capabilities carries even greater urgency, as businesses must manage a wide range of market pressures and respond with agility to highly unpredictable events.

In this paper, we explore the need for a holistic lead-to-revenue strategy — and the value organizations can unlock when putting Finance at the forefront.

The outsized — but often unrecognized — role of Finance in a recurring revenue model

The proliferation of a recurring revenue model requires organizations to support traditional finance functions, such as contract prorations or alterations, during the sales process. While CPQ tools, most commonly provided by Salesforce, have evolved to support contract amendments that include billing calculations during the sales process, they remain disconnected from finance tools and the ERP system. This increases complexity between the front and back office and potentially creates redundancies between these two functions. Determining where the handoff should happen between traditional sales and finance systems is one of the most critical aspects of an organization’s lead-to- revenue strategy.

In many organizations, the disconnect between Sales and Finance can be devastating, eating away at profit margins as sales professionals use inaccurate pricing data to generate quotes and creating billing discrepancies because the front and back offices are not aligned in terms of contract dates, costs, discounts, credits or proration. Many businesses have mismatched financial statements and unbalanced books as contracts and orders don’t align with invoices. This, of course, could negatively impact the organization’s ability to confidently shift growth strategies. It could also impede Finance’s ability to accurately report income and revenue, opening the organization to fines and penalties, as well as reputational harm.

While these issues certainly hinder Sales organizations as they attempt to formulate accurate and consistent quotes, it is often Finance that bears the brunt of this complexity—not just in terms of processing, but also as it relates to observing financial rules and regulations. Thus, a comprehensive and connected lead-to-revenue strategy isn’t an optional feature, but a vital aspect of every business’s compliance strategy.

Connecting Sales and Finance to enable growth, agility and scalability

Connecting the organization’s CPQ & Billing capabilities to any number of ERP systems is a challenging but necessary task.

The first step is determining precisely where the hand-off will occur between systems within the lead-to-revenue lifecycle. To do this, the organization must consider the full scope of requirements from the perspective of both Sales and Finance, as well as the technology that integrates them.

Here we will explore four common points of handoff within the lead-to-revenue lifecycle: 

For illustrative purposes, we have chosen to examine the handoff options between Salesforce CPQ & Billing and an ERP system, such as NetSuite. However, these scenarios are applicable regardless of vendor or technology provider.

Option 1: Lead to Order – Salesforce Order to ERP order

Salesforce CPQ owns quoting, pricing and order generation. The activated order is handed off to ERP for processing, invoicing and payments


Lead to Order Use Case: 

  • Companies with complex quoting but no change orders
  • Companies that rely on Salesforce CPQ but do not use Salesforce Billing
  • Companies that sell physical goods or perpetual models
  • Little or no billing pain in back office ERP

Option 2: Salesforce Invoice to ERP Invoice

Salesforce CPQ owns quoting, pricing and order generation.  Salesforce Billing uses data from the order to calculate invoices. Invoice detail is handed off to ERP for AR Management.


Lead to Invoice Use Case: 

  • Companies with complex quoting and require change orders
  • Companies that want to streamline the contract amendment process
  • Accounts Receivable is working well in ERP
  • No plan to change ERP in foreseeable future

Option 3: Lead to Payment – Salesforce Payment to ERP Payment

Salesforce CPQ owns quoting, pricing and order generation.  Salesforce Billing uses data from the order to calculate invoices.  Salesforce owns AR and sends invoice and payment details to ERP


Lead to Payment Use Case: 

  • Companies with complex quoting and require change orders
  • Companies that have payments challenges, often due to bulk recurring credit card transactions
  • Companies that require detail level financial reporting in ERP

Option 4: Lead to Ledger- Salesforce Journal to ERP Journal

Salesforce CPQ owns quoting, pricing and order generation. Salesforce Billing uses data from the order to calculate invoices. Salesforce owns AR and sends journal entries to ERP

Lead to Ledger Use Case

  • Companies with complex quoting and require change orders
  • Companies that do not have a robust ERP (e.g. rely on QuickBooks for Financials)
  • Companies that are uncertain about the direction of their ERP or the possibility of transition in the future

Why financials matter

Financial statements are the lifeblood of every organization. Their accuracy and timeliness influence virtually every aspect of the business, including:

  • The ability to monitor cashflow and proactively address possible constraints;
  • Identify sources and uses of available cash;
  • Provide consistent and comparable tracking/metrics to improve planning and adjust operations;
  • Improve decision-making, particularly as it relates to expenditures and headcount;
  • Increase agility and resilience in response to market volatility and disruption; and
  • Identifyandmitigateerrors, risk and threats.

Financial Applications: The Basics

  1. Order Management: Supports the sale process by a standard configure price quote (CPQ) solution
  2. General Ledger: Owns chart of accounts, journal entries, legal entities, currencies, finance periods
  3. Accounts Receivable: Manages invoices, statements, customer payments, credits, collections, taxes
  4. Revenue Management: Manages contracts, performance obligations, product valuation and associated accounting entries

The new rules of Finance

For the past several decades, the lack of standardization in financial reporting, particularly as
it relates to revenue recognition, has made it difficult for investors and other stakeholders to accurately gauge the health of an organization. As a result, the Financial Accounting Standard’s Board (FASB) and International Accounting Standards Board (IASB) developed and instituted revised rules to provide a comprehensive global framework for revenue recognition and financial reporting. These rules can be applied to all customer contracts regardless of industry- or transaction-specific fact patterns, which significantly enhances comparability across entities, industries, jurisdictions and capital markets. These rules also ensure that the guidance remains relevant as markets and transactions evolve.

This transformation of the regulatory environment requires every organization to design and implement an agile, flexible and scalable billing and revenue solution that considers these new rules and regulations, as well as the complexity of modern operations.

Snapshot of financial reporting rules

FASB Accounting Standards Codification (ASC) is a major restructuring of accounting and reporting standards designed to simplify user access to all authoritative generally accepted accounting principles (GAAP) by providing the related literature in an organized structure.

ASC 606 prescribes the method to recognize revenue from ongoing customer relationships, including how to identify obligations, determine the transaction price and allocate the transaction value to the performance obligations.

IFRS 15 provides a comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets.


  • As the scope of finance capabilities grows within Salesforce, the overlap between Salesforce and the ERP increases the complexity within the process, leading to confusion and potentially duplicating efforts across both systems.
  • Integrating Sales with Finance is complex and difficult to maintain due to the lack of APIs in some systems, which leads to disconnected and siloed systems and manual intervention on the part of the Finance team.
  • Salesforce Billing set up and configuration is critical to the organization’s ability to maintain efficient operations as well as adhere to financial rules and regulations.
  • Every organization must account for ASC606 and IFRS 15 within the Finance function, regardless of the point of handoff.

The Solution – Connecting Sales and Finance Operations with Navint

Determining where and when the handoff occurs between Sales and Finance is an important and complex decision. Navint works with clients to simplify this process, determining the optimal coordination point based on each client’s unique business needs, existing systems and capabilities.

To facilitate this process, we partner with multiple organizations, such as Workato, Jitterbit and MuleSoft to seamlessly integrate technology, people and processes between Sales and Finance. With this solution, the Sales organization has an intuitive, timely and accurate quoting and configuration tool that integrates with the latest ERP data. Meanwhile, Finance can reduce the amount of manual intervention needed to update and amend subscriptions while also ensuring that the data within the ERP is accurate.


While the shift to a recurring revenue model affects both sales and finance operations, the back office is often an afterthought. Today’s business landscape requires a far more proactive and coordinated approach — one in which Sales and Finance are aligned, connected and cooperating to optimize the lead-to-revenue lifecycle, strengthening the customer experience and reducing risk.

To learn more about how to connect your sales and finance operations, please contact us.


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