Under normal circumstances, the first quarter is a flurry of activity.
Your budget is solidified, and you’ve set aggressive revenue targets. Your comp plans, sales territories and booking targets are planned precisely to hit those revenue targets while staying within budget.
And under normal circumstances, visibility to revenue is important to your forecasting accuracy, and knowing where and when to pivot to meet your plan.
These are not normal circumstances.
As someone who last grew a company during the 2008 financial downturn, there’s one thing I know about our current economic situation:
Revenue visibility is critical now. To weather this storm, you need to know where your revenue is coming from, when it is coming, and to maximize every dollar you’re getting.
For companies that deal with bookings — you deliver over time and receive revenue over time — improving your revenue visibility will help you make it through the economic shifts caused by the coronavirus pandemic. It empowers your company to plan better for the impending business changes, see exactly how deals are tracking, spot risk quickly, and make better decisions.
But most companies have huge blind spots when it comes to revenue visibility.
There are more components to revenue than making sales in a timely manner, and more ways revenue plans can get off track, than most companies realize — missing growth targets, higher customer attrition and delayed revenue starting points, to name just a few. Finance teams aren’t notified of changes to pipeline, sales commitments, operational functions or existing run rate until it’s too late to act upon them and adjust the plan. Executive leaders are then confused when the sales team meets their booking targets for the year, but they’ve still failed to meet their revenue goals.
These are blind spots for your finance team — and they happen when Sales and Finance are too disconnected.
The good news is the blind spots are fixable.
Things may feel out of control right now. No doubt the productivity of your entire company has been affected by the fallout of this global pandemic. But there are ways to take action right now and gain some control back.
Consider these three things to eliminate blind spots and ensure you have clear visibility to your revenue.
1 Integrate the Sales Process With Financial Forecasting
The nature of sales commitments is dynamic. And because they have a direct relationship to forecasted revenue, changes to sales commitments should trigger changes in financial forecasting.
For most companies, that doesn’t happen — not without taking conscious action to integrate the sales process with financial forecasting.
Think through how your sales and finance teams are communicating right now. How is your sales team communicating to the finance team when it comes to pipeline changes or changes in sales commitments?
If Finance doesn’t have rapid visibility to the sales side, the impacts of reduced business (a likely occurrence in the wake of this pandemic), changing pipeline and deal slippage won’t be reflected on this year’s revenue projections.
How can you better connect Sales and Finance right now?
2 Enable Your CRM System to Provide More Timely Updates to Finance
Your CRM is the most robust source of sales process information for your entire company — and yet in most companies Finance is completely disconnected from
this critical data.
Clear visibility into existing pipeline and run rate is crucial to setting appropriate revenue targets — and it allows Finance to course-correct in a timelier manner. Make sure your CRM is set up to provide this insight to Finance quickly, easily, and ideally in an automated way.
With new artificial intelligence (AI) tools on the market, Finance can also put rules into some CRM systems for this purpose, which is a huge step toward empowering Finance to adjust plans on the fly. How can you give your finance team better visibility to your CRM?
Can your finance team put rules in place in the CRM to help them better project revenue over time?
3 Insert Finance Insight into the Sales Lifecycle
While giving Finance more insight from the sales process is import- ant to breaking down the silos and improving revenue visibility, there’s also danger in not having a feedback loop back to Sales on the revenue performance of sales commitments. Not being aware of the impact of delays in revenue starting points or deal delivery, for example, can lead to a false sense of security for sales teams.
If you can’t invoice customers until certain conditions are met, and if time lags affect your company’s ability to meet these conditions, conversion of bookings to revenue slows down. This not only puts revenue targets at risk, it can cost your company in lost customers and canceled contracts.
Keeping Sales looped in enables them to proactively address these issues with customers, and more effectively close gaps in revenue attainment. It also better prepares the sales team to stay aligned with the company’s goals.
Revenue visibility cuts two ways. How can you improve the communication from Finance back to Sales around revenue realization? Does your sales team have visibility to the current revenue forecast?
Have Push-Button Revenue Forecasting capabilities in less time it takes to do one revenue forecast using spreadsheets.