Managing Subscription Accounting
The subscription or recurring revenue business model has grown in popularity over the past decade because it can create a tighter relationship between organizations and consumers while providing a predictable revenue stream. However, there are accounting challenges associated with this business model because it introduces layers of complexity in managing subscription transactions with activations and billing over time in addition to one-time sales.
Ventana Research strongly recommends that organizations in the media and entertainment industry with a subscription or recurring revenue business model adopt a continuous accounting approach to manage these transactions. Technology has made it possible to not only remove operational constraints that once limited sales and marketing flexibility but also streamline back-office processes, shorten the accounting close and improve customer satisfaction. Automation improves data quality and strengthens controls by substantially reducing human error in the process. Continuous accounting is an elegant approach that uses technology to measurably improve a company’s operational and financial performance. We assert that by 2026, fewer than one-third of subscription companies will have adopted continuous accounting, giving those that do a business advantage.