Revenue Recognition and Advanced Revenue Management in NetSuite

This article will discuss the consequences of these changes in the context of financial systems today.

Zone & Co
Tagged In
9 min read
November 13, 2023

The evolution of a subscription-based economy has been estimated to expand between five to eight times faster than traditional businesses, according to the Harvard Business Review.  

A prime example of this is the development of subscription-based pricing, for online streaming services for TV, Films and Music. More recently, (and perhaps more interestingly) we have seen the move of subscription-based pricing introduced into tangible items from the likes of coffee, makeup, and food subscription boxes to vehicles. These changes in purchasing habits combined with governments turning the screw for revenue regulations, including revenue recognition to be completed electronically have introduced new challenges for finance teams.  

This article will discuss the consequences of these changes in the context of financial systems today. We will look at the practical challenges of managing common situations prevalent in today's marketplace:

  • Manual processes, silos of information and disparate systems  
  • Inflexible billing processes
  • Compliance with the ASC 606 revenue recognition model  

We will introduce specific solutions for Advanced Revenue Management in NetSuite:

  • NetSuite’s Advanced Revenue Management module  
  • ZoneBilling for NetSuite  

What common invoice and billing challenges do finance teams face when managing revenue?

Manual Processes, silos of information and disparate systems

We know you already know, if you want your invoices to be paid on time, they need to be sent out on time. At the best of times, invoices are delayed for common reasons such as missing data, inaccurate data, and misinformation. This can be made even more complex when billing has added complexities including variable rates, associated items and variable payment methods.  

Without the right billing engine, finance teams rely on a combination of information from CRM and finance systems combined with what is in their head and complex spreadsheets. Not only can this cause manual errors, but it also encourages duplication of resources leading to frustrating, inefficient internal processes. Ultimately, these challenges impact month-end and how quickly books can be closed, as well as time to receive payments.

Inflexible billing processes  

The rapidly increasing number of subscriptions has created a customer expectation for subscriptions. As a result, the market has become saturated with endless choices for customers. This combined with the cost-of-living crisis is causing consumers and businesses to review and reduce unnecessary spend.  

In response, businesses are introducing more personalised offerings, control, and flexibility for consumers, including upsells, downsells and modifications to their original purchase. This can lead to every sale or contract presenting an almost unique combination of billing requirements including items, services, amounts, payment frequencies and methods.  

In practice, finance teams are now tasked with meeting these requirements with change orders, changing performance obligations and new billing requirements. This means adding new sales lines, terminating contracts, and calculating rates and dates in spreadsheets. More time is spent journaling these changes, managing errors, and updating various systems to manage these new billing requirements.  

Compliance with the ASC 606 Revenue Recognition model

ASC 606 has been introduced to manage compliance with businesses that enter into contracts with customers. The legislation aims to improve revenue allocation and ensure accurate books at year-end.  

Key challenges in maintaining ASC 606 compliance for revenue recognition include:

  • True overview of revenue for your business.
  • Accurate data and showing revenue is received as it is earned.
  • Contracts with multiple performance obligations.
  • Inflexible revenue recognition.

A 5-step model to minimise complications with Revenue Recognition has been developed to manage these challenges.  

  1. Identify the customer contract.
  1. Specify performance obligations in the contract.
  1. Set the transaction price.
  1. Allocate the transaction price.
  1. Recognize revenue when, or as the entity satisfies a performance obligation.

In step five, the revenue is allocated as the seller meets the performance obligation. This can be a complicated process depending on the revenue recognition chosen; sales-based, percentage of completion, completed contract, cost recovery and installment.  

Before delving into the solution let’s explore some of the challenges mentioned earlier:  

What are Performance Obligations in Advanced Revenue Management?

Performance obligations simply refer to the obligation or ‘promise’ to deliver goods or services as per the terms set out in the contract.  

In layman's terms, if goods or services have been promised to the consumer at the point of purchase then it is the sellers’ responsibility to fulfil this contract and transfer the goods or services to the consumer at this time. Variations in or variable performance obligation requirements can be complicated to account for in revenue management.  

Challenging situations include contracts with multiple performance obligations. Consider mobile phone contracts with variable items such as contract prices, travel bolt-ons, handset upgrades, add-on bundles and more. The amount, price and date are just some of the variables which will need to be configured and billed. This is easy to imagine how to bill when considering one mobile phone however, this becomes challenging when required across thousands of consumers with different requests.  

These contracts require careful consideration and analysis. These invoice amounts must be accurate, as the timing of revenue recognition is dependent on this information.    

What is NetSuite’s Advanced Revenue Management (ARM) module?

NetSuite’s Advanced Revenue Management (ARM) was introduced as a new module to remain compliant with ASC 606 Standards introduced for Revenue Recognition processes. According to the Oracle Help Center, the module facilitates revenue forecasting, recognition, reclassification, deferral and auditing based on rule-based configurations. With NetSuite ARM, easily manage complex revenue allocations and remove duplications without modifying existing product SKUs.

The following records and transactions are used:  

  • Revenue Arrangements
  • Revenue Elements
  • Revenue Recognition Rules
  • Revenue Recognition Plans

What are the benefits of NetSuite ARM?

  • Easy configuration to ensure compliance with ASC 606 regulations.
  • Compatible for any industry with different types of revenue recognition.
  • Accurate revenue overview, driving reliable insights into business operations.
  • Streamline business processes, with automation based on pre-configured rules per contract terms.
  • Integration with your current financial processes.
  • Fewer manual processes with improved accuracy.

Who should be using ARM?  

NetSuite Advanced Revenue Management (ARM) is designed to improve revenue recognition processes for businesses. NetSuite’s ARM module is a strong engine offering off-the-shelf functionality for billing requirements when billing, pricing and performance obligations fall into predominantly fixed contracts.  

When requirements advance beyond traditional billing contracts, ZoneBilling can extend NetSuite’s ARM module to manage variable performance obligations. ZoneBilling is introduced to manage complexities when offering inventory or services (or a hybrid approach) within projects and contracts as a billing schedule for clients.  

What is ZoneBilling for NetSuite?

ZoneBilling by Zone & Co has been purpose-built for NetSuite, from user requests. As a Native SuiteApp, it is nested inside your everyday NetSuite platform. Built to streamline complex contracts and subscriptions with integrations for CPQ, CRM and much more. ZoneBilling removes manual billing processes, improving revenue management and has been built to extend the functionalities of NetSuite’s ARM module.  

How does ZoneBilling enhance NetSuite’s Advanced Revenue Management (ARM) module?

Now that you already know who NetSuite’s ARM is perfect for, let’s learn how ZoneBilling enhances the Advanced Revenue module.  

What sets ZoneBilling apart is its ability to seamlessly connect to NetSuite’s ARM module. ZoneBilling brings subscriptions, billing, and revenue together in one platform.  

Billing and revenue figures are easily matched, thanks to enhanced automation as the value flows seamlessly from the sales order to revenue.    

  • Manage any billing model in one platform  

Limitless opportunities for billing methods, no matter your, size, country or industry. Respond to requests and retain your customers with capabilities for a fixed fee and variable contracts, additional add-ons upsells and more, easily all within NetSuite with ZoneBilling. Say goodbye to Excel gymnastics, with reduced manual processes when managing pre-paid, usage-based, and enhanced revenue arrangements. The team at Zone & Co are confident that ZoneBilling empowers you to bill in any way you want to sell. If you have something challenging to bill, we welcome the challenge!

  • Enhanced capabilities for contract modifications, renewals and amendments

One way to adapt to today's competitive marketplace is by introducing contract modifications, renewals and amendments to retain customers. However, we don’t need to tell you how difficult they are to bill!  

Inflexible systems require termination and re-issuing of contracts for each change.

ZoneBilling minimizes the downstream implications of these changes with hassle-free upsells, downsells and change orders. With enhanced levels of automation to amend contracts, add new and merge existing sales lines, billing is recalculated for you enabling flexible revenue management.  

  • Easily integrates with CPQ, CRM and much more

We know it takes time to get used to a new CRM system. What sets ZoneBilling apart is our powerful API Wrapper integration feature which integrates smoothly with your CRM systems. Now you can manage change orders, pre-paid and usage-based contracts on the systems you already use (but with enhanced capabilities).

When should you look to implement ZoneBilling?

ZoneBilling is introduced when billing functionality beyond off-the-shelf capabilities is required. As a native billing solution, ZoneBilling seamlessly manages personalized billing schedules for the most complex billing schedules, with no additional integration required.  


In today’s subscription economy, the true challenge remains retaining customers amidst the variety of subscription services available.  

Through this article, we have explored various tools designed to elevate revenue management, ensuring relevance to customers, and facilitating value through personalised approaches like upsells, change management, and usage-based billing in NetSuite.  

NetSuite's ARM module provides support to configure billing and revenue management for various revenue recognition methods and ASC 606 compliance. ZoneBilling complements this by offering a unified platform with the flexibility to handle complex contract modifications, renewals and amendments, minimizing downstream implications.  

By leveraging purpose-built innovative systems such as NetSuite’s ARM module and ZoneBilling, businesses can efficiently streamline advanced revenue management processes, stay agile and meet diverse customer needs.  

Want to learn more? Sign up for our upcoming webinars to see it in action.

Still interested? Learn more about how ZoneBilling and NetSuite's ARM module are a powerful combination, here.

Zone and Co

At Zone and Co, we envision a world where finance teams are freed from clunky technology and manual processes. We have a range of (growing) Zone Apps with solutions for accountants, finance and HR teams which are purpose-built to improve business processes and improve efficiencies. Join our 200+ customers successfully using ZoneBilling today.  

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