Why You Need a Unified System to Support Accounting and Finance

Financial fragmentation poses significant challenges for growing organizations. While many companies rely on multiple point solutions for different financial functions, this approach creates inefficiencies, compliance risks, and decision-making delays that can hinder growth and profitability.

Read why organizations managing complex subscription and usage-based models require a unified finance system that handles billing, revenue recognition logic, and reporting within a single system architecture.

Technical challenges of disconnected systems

1. Data silos

Financial data scattered across multiple systems creates a complex web of inefficiencies. When your sales contracts live in your CRM or some shared network storage, invoices reside in the billing system, and revenue recognition processes are on a third system, building comprehensive financial reports becomes a time-consuming, error-prone process.

Hidden costs of system separation

Disconnected financial systems impose several hidden costs on organizations:

• Time inefficiency and resource waste: A common frustration for finance teams arises when they notice that a customer has paid less than expected. Lacking immediate context, they must manually reach out to the sales team to understand why. Sales might respond that the customer downgraded their plan in a recent conversation — but this information wasn’t captured or shared systematically. From there, finance must request the updated contract (if it exists), look for or regenerate a revised invoice, and update revenue schedules, forecasts, and internal systems to reflect the change. This process consumes time, requires back-and-forth communication, and introduces opportunities for human error.
• Inconsistent metrics: Different departments use conflicting data sources, creating unreliable KPIs.
• Compliance vulnerabilities: Fragmented systems create gaps in audit trails and make it difficult to maintain consistent compliance across all financial processes.‍
• Decision-making delays: When financial data requires compilation from multiple sources, critical business decisions are delayed or made with incomplete information.

2. Reconciliation complexity

Separate billing and revenue recognition systems create data synchronization challenges that compound with transaction volume. 

Unlike businesses that recognize revenue as soon as they sell or deliver a product, subscription businesses must recognize revenue over the period the service is provided. This becomes complicated with frequent contract changes and usage-based billing or hybrid models.

Key technical issues include:

• API latency and batch processing delays between systems
• Data mapping inconsistencies across different schema structures
• Transaction timing mismatches affecting journal entry accuracy
• Reconciliation overhead requiring manual intervention for discrepancies

3. ASC 606 compliance gaps

Fragmented systems create compliance vulnerabilities:

• Performance obligation tracking across multiple databases
• Transaction price allocation requiring cross-system calculations
• Contract modification handling with inconsistent data flows‍
• Disclosure requirements necessitating manual data aggregation

4. Multi-entity challenge

For group companies managing multiple subsidiaries, the complexity multiplies exponentially:

• Currency and consolidation complexities: Managing multiple currencies, exchange rate fluctuations, and consolidating financial data across entities with different fiscal calendars becomes nearly impossible with disconnected systems.
• Intercompany transaction management: As companies grow and add subsidiaries, intercompany matrices become increasingly challenging to complete manually, creating compliance risks and audit complications.‍
• Scalability limitations: Entry-level accounting software that works for micro businesses becomes a growth constraint as organizations expand, requiring expensive workarounds and manual processes.

5. Interdependent adjustments create risk if systems are separate

Billing and revenue recognition should be part of the same system. This is central to ensuring accuracy and efficiency in financial operations, yet it's often overlooked.

Fundamental relationship between billing and revenue

• The main reason for this integration is that billing is responsible for accounts receivable (AR), meaning that every time an invoice is approved, that amount becomes owed by the customer.
• Revenue recognition, on the other hand, determines how much value of the service has been provided.
• Over the lifetime of a contract, the total amount paid by a customer should match the total amount of revenue recognized.
• Because of this fundamental connection, both of these numbers — AR and revenue — should ideally be generated by the same system.

There are many intricacies that affect either AR or revenue.

For example, a change in AR should correspondingly affect revenue, and vice versa. If revenue is adjusted (due to a discount or service issue), that might result in a refund or the need to collect more from the customer — or in some cases, recognize it as a marketing expense. Since these two areas are tightly related, having them managed by separate systems creates risk. Each system would need to understand and handle every nuance, which is difficult and error-prone.

Take credit notes as an example. When a credit note is issued in the billing system, it also needs to be reflected in the revenue recognition system. But for that to work, the revenue system must understand why the credit note was issued and what to do with it. If the credit was just to void an invoice and reissue it with updated information (e.g., correcting an email address), revenue shouldn’t change. But if it reflects a true reduction in service or value, then revenue needs to be adjusted. These distinctions are subtle but critical.

Challenge with usage-based pricing

• In the case of usage-based pricing, invoices are generated based on usage, and ideally, revenue should also be recognized based on that same usage data.
• If billing and revenue are handled by two separate systems, the same usage data needs to be sent to both — and any updates must be synchronized precisely.
• If one system ingests the data and the other doesn’t, or if there's a timing mismatch, the numbers won’t align. This can lead to reporting discrepancies and internal confusion.

Deferred and unbilled revenue complexities

• The third area of concern is deferred revenue and unbilled revenue balances, which are highly dependent on how revenue is recognized and how AR is tracked.
• For example, when a customer pays in advance (i.e., AR increases before revenue), that balance is recorded as deferred revenue. Conversely, if revenue is recognized before an invoice is sent (i.e., AR increases after revenue), that amount is treated as unbilled revenue.
• However, even in prepaid contracts, edge cases exist. A company might delay invoicing despite delivering the service — in which case the earned amount for the initial period would fall under unbilled revenue, not deferred revenue.

When billing and revenue recognition live in separate systems, this kind of logic doesn't flow automatically between them. Teams are forced to manually define static rules — for instance, specifying that "Product A is always prepaid and recognized as deferred revenue" or "Product B is always billed later and recognized as unbilled revenue." But these rules don’t account for real-world exceptions. Without seamless, real-time communication between systems, such setups become fragile and error-prone.

Architectural benefits of unified platforms

1. Native data flow architecture

Unified platforms eliminate ETL processes between billing and revenue recognition by maintaining transactional data within a single database structure. 

I'll explain ETL in detail, particularly in the context of financial systems and how unified platforms eliminate the need for them.

What is ETL?

ETL stands for Extract, Transform, Load - it's a data integration process used to move data between different systems. Let me break down each component:

1. Extract

• What it does: Pulls data from source systems (like your billing software, CRM, or accounting system)
• Challenges: Different systems store data in different formats, structures, and locations
• Example: Extracting customer billing data from your subscription management system

2. Transform

• What it does: Converts the extracted data into a format that the destination system can understand
• Challenges: Data mapping, format conversion, validation, and cleaning
• Example: Converting date formats from "MM/DD/YYYY" to "YYYY-MM-DD" or mapping customer IDs between systems

3. Load

• What it does: Inserts the transformed data into the destination system
• Challenges: Ensuring data integrity, handling duplicates, managing timing‍
• Example: Loading processed billing data into your revenue recognition system

How unified finance systems eliminate ETL

ETL stands for Extract, Transform, Load - it's a data integration process used to move data between different systems.

‍

1. Native data flow architecture

💡Traditional: Billing DB → ETL → Revenue DB

💡Unified: Single DB handles both billing and revenue recognition

2. Atomic transactions

When a customer upgrades their subscription in a unified system:

1. Billing record is created
2. Revenue recognition schedule is updated
3. Both happen in the same database transaction
4. If either fails, both roll back (maintaining data integrity)

3. Real-time processing

• No time delays between billing and revenue recognition
• Instant financial reporting
• Live compliance monitoring
• Immediate audit trail creation

2. Single source of truth

When financial operations are on a unified finance system, all stakeholders access the same information simultaneously. This eliminates the common scenario where teams debate financial metrics because they're looking at different data sources or versions.

A unified system provides:

• Consistent financial reporting across all departments
• Real-time visibility into cash flow, budgets, and operating expenses
• Synchronized vendor information and payment tracking
• Automated transaction categorization and management
• Alongside a unified finance platform, adopting a modern payment solution for businesses can help eliminate manual handoffs in billing and collections. Tools like this ensure smoother cash flow tracking, automate invoice reconciliation, and reduce the friction between finance and operations.

3. Automated revenue recognition logic

Unified finance systems automate:

• Contract identification and performance obligation verification (check out Contracts AI by Zenskar!)
• Transaction price determination and allocation algorithms
• Revenue recognition timing based on satisfaction criteria‍
• Deferred revenue schedule generation and maintenance

4. Comprehensive financial visibility

• Financial data visualization: Integration of payroll providers, bank accounts, credit cards, revenue streams, and bill pay functions in one centralized location provides complete financial transparency.
• Automated calculations: Built-in calculators for critical metrics like burn rate, runway, and zero cash date eliminate manual spreadsheet calculations.

💡On a related note, Zenskar’s Insights AI, provides instant answers about MRR, ARR, churn, and other critical metrics, allowing users to ask questions and receive AI-generated visual reports and trend analysis in seconds without needing to manually crunch numbers.

Zenskar's unified approach solves significant finance problems

Now, if you're contemplating using two separate systems for billing and revenue recognition—a combination of part of Revrec is done by the billing software, rest is done manually and then uploaded to the ERP, or all on ERP, or part manually and part ERP—let me share a different perspective. 

Our co-founder and CTO, Saurabh Agarwal, strongly believes one unified system can better support your Accounting and Finance operations. Here’s his take:

No system fragmentation

Having worked with numerous finance teams navigating similar decisions, I've seen firsthand how the two-system approach creates unexpected challenges that compound over time. They tend to need repetitive manual processes and back and forth communication between team members to resolve recurring problems.

For instance, Zenskar consolidates usage-based billing, subscription billing, and revenue recognition system in a single product. Compare this to a Metronome-plus-Maxio approach, where you'd need to maintain:

• Two separate vendor contracts and relationships
• Dual data pipelines feeding different systems
• Salesforce integration services needed for syncing data
• Multiple integration points that need constant monitoring
• Complex reconciliation processes between systems
• Separate user training and support for each platform

In my experience, what starts as a simple integration between billing and revenue recognition systems quickly becomes a full-time maintenance burden. I've watched finance teams spend countless hours each month just ensuring their two systems are talking to each other correctly.

Cleaner accounting workflows

Here's where I see the biggest operational benefit: because billing and RevRec are natively connected in a unified system, there's no risk of timing mismatches between invoices and revenue events.

I've seen too many month-end closes delayed because:

• Usage data processed in the billing system at 11:59 PM doesn't sync to revenue recognition until the next day
• Invoice adjustments create cascading changes that require manual intervention
• System downtime in one platform affects the entire revenue recognition process

With a unified approach, journal entries, deferred schedules, and reporting are automatically in sync.

Fewer handoffs and less technical overhead

This is perhaps the most underestimated challenge I see teams face. With separate systems, Finance doesn't just need to understand two different platforms—they need to rely on Engineering to bridge gaps between usage events and revenue treatment.

I've watched this play out repeatedly:

• Finance identifies a discrepancy in revenue recognition
• Engineering needs to investigate the data flow between systems
• The issue might be in the billing system, the integration layer, or the revenue recognition system
• Resolution requires coordination between multiple teams and vendors

With Zenskar handling contract ingestion, mapping, and revenue logic end-to-end, there are no additional data wrangling or reconciliation steps. Finance owns the entire process without depending on Engineering for routine operations.

Zenskar’s unified finance system is clearly better

The overhead of maintaining two systems, ensuring data consistency, and managing the integration complexity typically outweighs the marginal benefits of specialized features. And when issues arise (as they inevitably do), troubleshooting problems that span multiple systems becomes significantly more complex.

Given where you are in your evaluation process, I'd strongly encourage you to seriously consider the unified approach. Your finance team will thank you for choosing a solution that lets them focus on financial analysis and business insights rather than system maintenance and data reconciliation.

Have questions about the unified approach? Reach out and schedule time to discuss specific scenarios or concerns you may have about consolidating these functions into a single platform.