NetSuite Advanced Revenue Management Primer – ARM Essentials & Revenue Allocation

NetSuite Advanced Revenue Management or NetSuite ARM has revolutionized the ever-evolving landscape of financial management in organizations that strive to achieve precision, efficiency, and compliance in their revenue processes.

The NetSuite Advanced Revenue Management (ARM) is a comprehensive solution that not only enhances revenue recognition but also ensures that businesses adhere to complex accounting standards.

In this article, we will try to understand the essentials of NetSuite ARM (Advanced Revenue Management), explore its features, and highlight the benefits, that it offers to organizations. We will also touch on key concepts and tools associated with this powerful module.

Introduction to NetSuite Advanced Revenue Management or NetSuite ARM?  

NetSuite Advanced Revenue Management (ARM) also known as ARM (Essentials) is a NetSuite module that is designed to automate and streamline revenue forecasting, recognition, reclassification, deferral, and auditing. NetSuite ARM offers a rule-based event handling framework, that helps organizations manage their revenue processes more efficiently and accurately.

NetSuite ARM (Essentials) is the based module that comes with an add-on of revenue Allocation. Let’s break down the core components of NetSuite Advanced Revenue Management (ARM) – Essentials:

1. Revenue Arrangements: The “Revenue Arrangements” are non-posting transactions that capture the details of customer performance obligations for revenue allocation and recognition.

NetSuite ARM automatically generates revenue arrangements from predefined sources like approved sales transactions. Multiple revenue sources can be consolidated into a single arrangement, thus simplifying the management of complex contracts.

2. Revenue Elements: The “Revenue Elements” correspond to individual lines in a source document that represent specific performance obligations. These elements are integrated into revenue arrangements, ensuring precise tracking and management of each obligation.

3. Revenue Recognition Rules: The “Revenue Recognition Rules” in NetSuite Advanced Revenue Management or ARM, define the patterns for recognising revenue. They specify the recognition method, amount source, and start and end dates. By establishing clear guidelines, businesses can ensure consistent and compliant revenue recognition practices.

4. Revenue Recognition Plans: The “Revenue Recognition Plans” indicate the posting periods for recognizing revenue and the amounts to be recognized in each period. These are derived from the revenue recognition rules; the Revenue Recognition Plans help in forecasting and actual revenue tracking. The creation of “Revenue recognition journal entries” is crucial to post the recognized revenue to the general ledger.

Add-on for Revenue Allocation  

NetSuite offers an add-on feature to NetSuite ARM (Essentials) – Advanced Revenue Management (Revenue Allocation). The ARM Revenue Allocation feature is important for allocating revenue across multiple performance obligations using fair value pricing, range checking, and fair value formulas. The key features of NetSuite ARM Revenue Allocation include:

• Fair Value Pricing: Revenue allocation is based on the fair value of items, which can be determined using various methods such as standalone selling price (SSP), vendor-specific objective evidence (VSOE), best estimate of selling price (ESP), or third-party evidence (TPE).
• Fair Value Price List: This record defines the fair value for items and is used to allocate revenue in revenue arrangements, ensuring that revenue is recognized fairly and accurately across multiple elements of a contract.

Advantages of NetSuite Advanced Revenue Management  

Implementing NetSuite ARM offers numerous benefits that enhance financial operations:

• Automation and Efficiency: By automating revenue processes, ARM reduces manual intervention, minimizing errors, and saving time.
• Compliance: Ensures adherence to complex accounting standards such as ASC 606 and IFRS 15, reducing the risk of non-compliance.
• Visibility and Insight: Provides comprehensive visibility into revenue processes, enabling better forecasting and strategic decision-making.
• Scalability: Supports growing businesses by handling increasingly complex revenue arrangements and recognition needs.

Important Features of NetSuite ARM  

• NetSuite Revenue Recognition: Ensure compliance and accuracy through automation of the entire revenue recognition process.
• NetSuite Revenue Management Cloud Service: Offers cloud-based solutions for managing revenue processes, providing accessibility and flexibility.
• NetSuite Advanced Revenue Module: An integral part of the NetSuite ARM suite, this module brings additional features and capabilities to enhance revenue management.

Conclusion  

In conclusion, NetSuite Advanced Revenue Management (ARM) is a must-have tool for organizations wanting to improve their revenue processes, stay compliant, and gain valuable financial insights. By automating important tasks and offering strong features for revenue recognition and allocation, NetSuite ARM helps businesses work more efficiently and accurately. Whether you’re a financial professional looking to boost your skills or a company aiming to optimize revenue management, exploring NetSuite ARM is a smart step toward financial excellence.

By using NetSuite Advanced Revenue Management, organizations can improve their revenue processes, ensure compliance, and plan strategically. This powerful tool meets the complex needs of modern businesses, making it a key part of any strong financial management system.

Ready to enhance your revenue management? Explore NetSuite ARM today and take your financial operations to the next level! Contact our experts to get started and see how NetSuite ARM can transform your financial management.