Case Study

WilliamsMarston Clears the Way for Automated Revenue Recognition Process

Learn how WM supported a mid-market, private equity-backed software company transform their manual revenue recognition process to an automated system, while navigating a potential IPO.

The Challenge

Mid-market, private equity-backed company required technical expertise for software revenue recognition efforts amid increased scrutiny and exploration of entering the public markets.

Despite previously adopting Accounting Standards Codification (ASC) 606, a mid-market, private equity-backed company’s historical revenue recognition policies were subject to increased scrutiny during the company’s Public Company Accounting Oversight Board’s (PCAOB) uplift audit, resulting in changes in revenue recognition and related policies. The company offered on-premise perpetual software and term software related maintenance—both subject to residual approach under ASC 606—as well as hardware, a Software-as-a-Service (“SaaS”) platform and professional services.

While the company was able to manually determine the standalone selling price for performance obligations, with the exception of its on-premise software solution, they historically incurred a high volume of transactions with meaningful discounting practices that required large amounts of time and effort to analyze. Due to the volume of transactions incurred, the company found themselves in need of a more efficient way to analyze and compile transactional data for purposes of it’s standalone selling price studies. Furthermore, the revenue recognition accounting process was a highly manual endeavor, requiring a large continuous level of effort by the Company to maintain.

The Solution

WM’s evaluation of existing revenue recognition processes and discovery of the company’s data capture process sparked the path to a fully automated system.

To start the engagement, WM collaborated closely with the company to gain an understanding of their operational quote-to-cash process and revenue recognition policy. From there, the team gained access to the company’s Salesforce Customer Relationship Management (“CRM”) platform to evaluate how front office data and bookings information were captured and to understand the level of granularity the data capture process encompassed.

WM utilized SQL to script an automated, repeatable solution that automated the company’s standalone selling price (SSP) studies, tailored to the company’s specific data capture process, the results of which were reviewed and signed-off by management and automatically included in the WM-built, SQL based, automated revenue recognition solution.

The Result

WM created a fully functioning, automated revenue recognition system, inclusive of an automated SSP study compilation function, to ensure seamless finance operations.

The solution WM created included key automated outputs such as revenue recognition transactional detail, automated deferred revenue waterwall reports and unbilled revenue reconciliations.

While the company never completed the IPO process, a clean audit opinion was issued over revenue in all periods presented in the company’s confidential filings. The automated revenue recognition was so effective that it is still employed by the company today.

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“I could not have made it through our initial public offering without the team from WilliamsMarston to field so many complicated issues. You have been fantastic, and it’s been a pleasure to reach this milestone with you!”Chief Financial Officer
IPO Company

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“I am sure we had one of the most complicated preferred stock conversions at our IPO than any other company. We appreciated your help. You made us look good, and we look forward to continuing to work with you.”Chief Financial Officer
IPO Company

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“I wanted to share my thanks for all the work WilliamsMarston did. Thanks to your great work, I felt confident going into the audit prepared.”VP Finance
Private Company

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“I continue to be impressed and grateful with the level of attention and technical expertise your team consistently provides.”Senior Finance Director
Public Company


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