Revenue Recognition using Zuora’s Integration to NetSuite

We recently led a NetSuite implementation to help a client get off of QuickBooks so they could perform Advanced Revenue Recognition for their growing business. ¬† The client had previously made significant investments in and Zuora for their recurring billing and payment platform. ¬†The client’s subscription business was served well by Zuora. ¬†They especially enjoyed the capacity to make rate and quantity adjustments mid-term from their traditional annual contract cycle.

For example, one of the client’s customers may purchase a standard package subscription with 10 users over the course of one year. ¬†During month four, the client’s customer would desire an upgrade to a premium package while adding 5 users. ¬†One of Zuora’s strengths is the capacity to know exactly how much was invoiced and consumed at any point in time and then calculate how much to unwind, and roll forward to account for the new base package and extra users accounting for price and quantity changes respecting the contract end date.

Although NetSuite has an Advanced Billing module that supports recurring billings, its mechanisms are not as refined as Zuora’s. ¬†The client’s primary concern was recognizing revenue on the accrual basis as this was being conducted manually in a slew of spreadsheets. ¬†Zuora basically created invoices and these would come over to QuickBooks and end up being revenue transactions at the invoice date. ¬† While simple enough, it would often overstate revenue especially if the billing frequency was longer than one month. ¬† The challenge then, for any growing organization, is to recognize revenue as it is earned. ¬†In this case, revenue was earned over the passage of time relative to the contract start and end dates.

NetSuite has a strong revenue recognition module. ¬† Since Zuora already did the hard work of developing a an integration using Boomi’s integration service, we worked with the Zuora team to help the client migrate from QuickBooks to NetSuite while pulling in invoice, credit memo, and payment events from the Zuora billing engine. ¬†The integration worked overall well once we carefully outlined the cutover narrative and worked through many test scenarios. ¬†While the technology is not a simply “turn-it-on-and-forget-it” integration, the heavy lifting of the nuts-and-bolts aspects of the technology mapping and transformation was complete.

Like any serious software endeavor, it went smooth due to many planning conversations, confirmation of the architecture, setup and configuration on both NetSuite and Zuora, and much testing.   We even did it without a NetSuite Sandbox which presented both opportunities and challenges.  Our client was very active in the implementation which made a major difference in reducing risk and helping us stay well under our proposed budget.

If you are looking to leverage both technologies, let’s have a conversation.

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Marty Zigman

Holding all three official certifications, Marty is Southern California's NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 25 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.

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| Tags: , , , , , | Category: Accounting, General, NetSuite | 1 Comment

One Comment

  1. Posted July 3, 2012 at 2:15 pm | Permalink

    I am fairly convinced we need to move in this direction. We moved from Quickbooks to NetSuite a year ago and use our own proprietary software for billing. We’ve outgrown it and we need to implement something that will support our model.

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