The Risks of Relying on ERP for Revenue Automation

Many businesses rely on their Enterprise Resource Planning (ERP) systems as a one-stop solution to manage all their operations, from finance to inventory. For accounting teams, the ultimate goal is simple: close the books on day one of each month. However, as the business world evolves with usage-based pricing, dynamic contracts, and complex revenue recognition requirements, ERPs are creating the very delays they were meant to eliminate. 

Finance teams find themselves trapped in multi-day closing cycles—chasing down missing context, reconciling inconsistent data across systems, and manually bridging gaps that modern business models demand. The truth is, ERPs weren't built for today's revenue complexity, and they're showing their age when it matters most: getting accurate financials fast.

ERP vs revenue automation platforms: What you need to know

Enterprise resource planning

An ERP is meant to be the source of truth for the general ledger of the business. Think of this double-entry system as the foundational layer of this software, much like the operating system. Each ERP has a variety of modules (apps) on top of this foundational GL (operating system). 

The apps in the ERP are generally built to solve basic cases and typically require a fair bit of manual effort to make work. Companies use these until they realize that this is taking too much of their time, and then replace each app with specialized software built to automate that part of the business, e.g., AP software instead of the ERP's AP module, payroll, billing, etc.

Revenue automation software

Revenue automation platforms, on the other hand, are purpose-built to handle the complexities of revenue generation. These platforms automate billing, usage metering, and real-time revenue recognition. They sync seamlessly with ERPs but are not limited to just recording data—they drive the entire revenue workflow. These systems are designed to accelerate revenue recognition, reduce manual errors, and ensure compliance with complex accounting standards like ASC 606 and IFRS 15.

ERP: Single source of truth for the general ledger

ERPs manage the following:

All these modules capture transactional data that ultimately flows into the General Ledger, which serves as the central financial record-keeping system. The GL consolidates all business activities into debits and credits, providing a complete financial picture of the organization's operations, assets, liabilities, and equity.

This centralized approach means the ERP becomes the single source of truth for financial data across all business departments and processes.

What ERPs do well?

• ERPs are designed to provide a historical record of your company’s financial transactions. 
• They track revenue, generate standardized financial reports (P&L, balance sheet, cash flow), ensure regulatory compliance (SOX, tax reporting), and provide historical data for budgeting and forecasting.

Why should you re-evaluate your ERP for revenue recognition?

As businesses evolve and revenue models become more sophisticated, the limitations of ERPs become apparent.

1. Lack of specialization for revenue recognition

ERP systems are designed to manage a wide range of business processes—finance, HR, procurement, inventory, etc. However, revenue recognition is only one aspect of the overall financial management, and ERPs are not built specifically to handle the complexities of modern revenue models such as:

• Inability to handle complex revenue models:
  ERPs struggle with recurring revenue, consumption-based pricing, ramp deals, contract amendments, and bundled offerings. These models require dynamic adjustments to revenue recognition rules and performance obligations, which most ERPs can't provide without significant customization and/or ongoing manual effort.
  
• Complex deal structures: Bundled products, multi-element arrangements, and contract amendments create challenges that traditional ERPs struggle to address without significant customization.
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• ASC 606/IFRS 15 compliance: Adapting to evolving revenue recognition standards like ASC 606 is often a cumbersome process in ERPs, requiring manual adjustments, workarounds, or costly customizations. 
  

• Repetitive manual effort: When billing systems lack rev rec capabilities or don't integrate directly with the ERP, finance teams resort to repetitive manual processes—downloading transaction data, transforming it in spreadsheets to calculate proper revenue recognition schedules, then uploading the adjusted entries back into the ERP. This creates error-prone, time-intensive workflows that become unsustainable as transaction volumes grow.

2. Customization complexity and costs

ERP systems often require significant customization to meet the unique needs of businesses, especially for handling complex revenue models. Customizing an ERP system for specific revenue recognition processes leads to:

• High upfront and ongoing costs: Customizations can be expensive, both in terms of implementation and ongoing maintenance.
  
• Technical debt: Each new customization adds complexity, making future updates or improvements more challenging and resource-intensive. As a result, businesses face rising IT costs and more frequent breakdowns in functionality.
  
• Slower time to value: Custom-built ERP solutions take longer to implement, reducing the agility needed for adapting to new revenue models, pricing strategies, or market changes.
  

Resource drain and inefficiency: Extensive customizations often require dedicated engineering bandwidth for ongoing maintenance and updates. This takes valuable attention away from other critical projects and increases the likelihood of operational inefficiencies. Additionally, custom-built systems are more vulnerable to errors and require constant monitoring.

3. Data silos and integration issues

ERPs are designed to centralize data across various business functions, but they often struggle with integration when dealing with specialized needs like revenue recognition. This leads to:

• Data fragmentation: Financial data may be stored separately from other critical business functions, making it harder to get a clear, unified view of the revenue cycle.
  
• Manual workarounds: To fill in the gaps, businesses often rely on external systems, spreadsheets, or manual interventions, leading to inefficiencies and errors. This leads to data silos, higher risk of errors, and wasted time on manual processes. Even with these integrations, ERPs are still not optimized for automating these workflows, which significantly slows down operations.
  
• Delays due to back-and-forth: When systems don't integrate seamlessly, finance teams lose visibility into the "why" behind the numbers. 

For example, when customer payments drop unexpectedly, finance must manually trace through invoices, then reach out to sales to understand if contract terms changed. 

This detective work across disconnected systems creates delays—what should be a day-1 book close becomes a multi-day process of reconciling discrepancies, hunting down explanations, and waiting for responses from other departments. 

A unified system eliminates this back-and-forth by providing complete transaction context in one place, enabling true real-time financial reporting.

4. Delayed and batch-processing financial data

ERPs typically operate on batch processing for financial data, which means they process information at the end of a period (e.g., monthly or quarterly) rather than in real-time. This leads to:

• Lack of real-time insights: Businesses that need to make immediate decisions based on up-to-date revenue data are often forced to rely on outdated reports, reducing the agility of the organization.‍
• Inaccurate financial picture: Since ERPs typically do not provide real-time revenue recognition, businesses may lack visibility into the actual performance of revenue streams until month-end or quarter-end, leading to potential surprises.

5. Cumbersome reporting and compliance

Financial reporting and audit trails in ERPs can be cumbersome, especially for businesses needing to comply with modern accounting standards such as ASC 606. ERPs typically:

• Struggle with complex revenue reports: Generating detailed reports for complex revenue models (e.g., revenue by product, segment, or contract type) is often time-consuming and requires additional customization.‍
• Lack of real-time auditability: ERPs often don’t offer real-time visibility into the revenue position, making it difficult for finance teams to provide timely and accurate information to auditors or leadership.

6. Scalability issues for growing businesses

As businesses scale, the limitations of ERPs become more apparent, especially when handling higher transaction volumes or expanding into new markets:

• Increased transaction volume: ERPs can’t process high volumes of transactions, especially when revenue recognition becomes more complex.‍
• Slow response times: As your business grows and diversifies, ERPs can become slow and unwieldy, requiring more resources to manage and maintain.

Revenue automation platforms: Built to handle revenue

Revenue automation platforms are built to handle the intricacies of modern business revenue models. Here’s how they compare to ERPs:

Key advantages of revenue automation

• Automated revenue workflow:
  Automates billing, usage metering, and revenue recognition for various pricing models—subscription, usage-based, or custom pricing—ensuring seamless operations.
  
• Real-time revenue:
  Provides dynamic revenue recognition for complex revenue models, ensuring compliance with ASC 606 and IFRS 15 in near real-time, giving accurate and timely insights into financial health.‍

• End-to-end revenue recognition:
  Revenue automation systems don't just record data; they actively manage revenue workflows, from contract ingestion and pricing adjustments to performance obligations and reporting.

Stay future ready with Zenskar’s AI-powered revenue automation

Zenskar is an AI-powered order-to-cash platform that takes the complexity out of billing, revenue recognition, and SaaS metrics. It’s designed by finance experts for finance teams, removing manual work, spreadsheets, and the need for developer intervention.

What Zenskar does:

• End-to-end solution:
  Automates the entire order-to-cash process. Simply provide contract and usage data, and Zenskar handles the rest—no spreadsheets, no manual entries.
  
• Handles any pricing or contract model:
  Whether it's simple subscription pricing or complex hybrid contracts, Zenskar’s graphical data model adapts without requiring workarounds.
  
• Decoupled billing & metering:
  Iterate your pricing models without changing the metering setup, and vice versa. This flexibility allows you to scale efficiently without overhauling your systems.
  
• Decoupled billing & revenue recognition:
  Manage performance obligations and revenue schedules independently of billing terms, ensuring accuracy even when contract terms change.
  
• Modular, off-the-shelf features:
  Zenskar supports multi-entity management, entitlements, prepaid pricing, and more—without the need for developer-heavy customization.‍
• Single source of truth:
  With 200+ native integrations with CRMs, CPQs, ERPs, and payment gateways, Zenskar ensures that your data is always in sync, accurate, and up-to-date.

Why choose Zenskar:

• Faster month-end close:
  Close your revenue-related books up to five times faster compared to ERPs and traditional accounting systems.
  
• Real-time compliance:
  Automated revenue recognition ensures compliance with ASC 606/IFRS 15, providing real-time data and eliminating manual processes.
  
• Seamless integration:
  Zenskar integrates smoothly with your existing tech stack, including CRM, ERP, and payment gateways, ensuring data is always up-to-date.‍
• Scalability:
  From startups to enterprise-level businesses, Zenskar grows with you—no matter how complex your revenue streams become.

Conclusion: Is it time to leave your ERP behind?

As businesses move toward more complex pricing models, subscription-based revenue, and intricate contract terms, it becomes clear that traditional ERP systems are no longer sufficient for managing modern revenue recognition needs. While ERPs serve as a centralized hub for various business functions, they fall short when it comes to automating revenue workflows, ensuring compliance, and handling real-time data.

Zenskar is the solution to these challenges. It automates the revenue recognition system and billing solution, ensures compliance, and provides real-time financial insights—streamlining your operations and allowing your finance team to focus on growth, not manual processes. Unlike traditional ERPs, Zenskar is designed to handle modern subscription models, usage-based pricing, and evolving revenue structures.

This flexibility is particularly evident for companies with diverse contract structures. As Leza LeBlanc, Controller at Indigov, explains:

Ready to take control of your revenue recognition process? Contact Zenskar today for a demo and see how we can simplify your billing and revenue recognition workflow.