Data entry is the least talked-about process within business. Although most managers rely upon the end results of data entry (final reports) to make critical decisions, they probably never ask how that data is entered into the system in the first place. More importantly, they never ask whether it was entered correctly. Accuracy in data entry is important especially when business decisions are made off of the end results. In today’s post, we are going to compare the different data entry points between QuickBooks and NetSuite, and their effects on revenue recognition for software companies.
Courtesy of complexdataentry.com
To understand the differences in data entry points, we must first understand what data is required to calculate revenue recognition for software companies. As we have noted in previous posts, revenue recognition begins with a contract. Each element of a multi-element contract has to be separated and a fair market price has to be assigned to it. Determining fair value is done through a vendor specific object evidence calculation, such as the bell curve or the residual method.
Within the revenue recognition for software companies processes, there are a number of data points that need to be entered, including the following:
- Customer contact information
- Past sales pricing information (used to calculate VSOE)
- Current contract information including the final price of each element
- Timing of revenue (will revenue be recognized based on percentage used, subscription, or something else)
- Collection schedule
All of the above mentioned data points must be stored somewhere within the accounting system in order for revenue recognition for software companies to occur.
Data Entry within QuickBooks
As the name implies, QuickBooks is really a bookkeeping software. As such, it is really only interested in the final data input. In the case of revenue recognition for software companies, it will only accept the final revenue number. All of the other data points such as past selling price of each element, VSOE calculations, and the timing of revenue must be tracked outside of the system within spreadsheets. These spreadsheets often contain errors and are difficult for others to access.
Courtesy of google.com
Data Entry with NetSuite
One of the core features of NetSuite is its ability to automate data entry. Once information is entered into the system one time, it is updated to a single database and redistributed to users as necessary. Regarding revenue recognition for software companies, the price of each sale is stored within the system and can be recalled as necessary. VSOE can be automatically calculated based upon the past sales history. In addition, the recording of revenue recognition can be automated so that it occurs based upon other inputs from the system and does not have to be entered again.
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Major Differences
The primary difference between NetSuite and QuickBooks is automated verse manual data entry. With NetSuite, users have the ability to automate data entry and write it to a single database that can be accessed by all parts of the business. On the other hand, QuickBooks forces data to be entered multiple times within different spreadsheets, databases, and finally the accounting system. Only the final data input is actually stored within the database while the other inputs have to be stored somewhere else.
Data entry is difficult because as humans, we are prone to mistakes. If you are interested in improving your data entry processes by automating your accounting software, please contact us.
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