How Sourcegraph cut revenue recognition time by 70% with ZoneBilling

Sourcegraph, a top-tier code intelligence platform, transforms the way developers understand, fix, and automate their code. As the company's customer base started to grow rapidly, its small accounting team found it increasingly difficult to manage billing and revenue recognition in NetSuite, particularly after adopting the ASC 606 standard. The manual processes could no longer cut it, and an automated billing solution within NetSuite was needed to handle the growing demands and complexity.

The challenge: Manual billing and revenue recognition overwhelming a small but mighty team

Sourcegraph operates on a SaaS subscription-based business model, offering its platform at various price points for individual developers, teams, and enterprises. The company has experienced explosive growth in the last few years, now serving over 2.5 million engineers worldwide. 

As their customer base grew, the manual effort of managing recurring billing and revenue recognition began to overwhelm the small but mighty accounting and FP&A teams. The four main challenges they faced were:

• Manual processes: The billing and revenue recognition rules were applied manually by the team, especially after adopting the ASC 606 revenue recognition standard. This was becoming increasingly time-consuming for their team of three people. Billing customers often took more than one full business day every week, and almost a full business day for revenue recognition monthly. This amounted to up to five full business days spent only on this operational accounting task and was only going to increase with the growing number of customers.
• Complexity: The ASC 606 standard introduced new complexities. Identifying performance obligations, such as distinguishing between licenses and updates in bundled offerings, and accounting for variable considerations like usage-based pricing or tiered service levels across numerous customer contracts, was time-consuming, highly complex, and prone to errors without automation.
• Platform constraints: While the finance team at Sourcegraph used NetSuite for customer billing, they found that the standard features provided by the platform struggled to manage the growing complexities of their subscription model and additional complications coming from ASC 606 compliance. 
• Lack of integration: NetSuite and Salesforce CRM were not connected, forcing the team to manually enter data whenever a subscription changed mid-term or a contract was amended. The lack of a unified system meant they spent considerable time manually verifying data across both platforms to maintain accurate data and revenue reporting.

What did they decide? 

Sourcegraph felt implementing an automated recurring billing solution would allow the finance team to apply additional customizations within NetSuite while reducing manual workload. The team needed a tool that could support seamless data integration between NetSuite and Salesforce (SFDC) with two-way data flow, and reduce manual effort through automated recurring billing, revenue recognition, and reporting processes. 

“Revenue recognition and billing had become super manual, particularly after implementing ASC606 processes. With our growth in our customer base, we urgently needed a more automated billing solution for NetSuite.” - Samantha Ulrich-Herman, Accounting Manager at Sourcegraph

The Solution: An advanced subscription billing solution in NetSuite for a fast-growing software business

Sourcegraph wanted to create a better, easier, and fully optimized process for billing their customers and recognizing revenue using NetSuite. The company needed to integrate CRM with NetSuite so that bill creation could happen automatically once a deal was closed-won in SFDC. 

Sourcegraph identified three specific criteria the advanced billing solution would need to have:

• The tool needed to easily handle usage-based billing, eliminating the need for the team to manually manage spreadsheets and other bespoke finance solutions, so they could automatically bill every customer correctly and on time, as well as accurately recognize and reconcile recurring revenue every month.
• The integration with Salesforce was important as the company needed the data to flow directly from CRM to NetSuite, enabling synchronous updates.
• The solution needed to function within their existing NetSuite instance, eliminating the need for users to switch between platforms or resort to Excel spreadsheets for data management.

ZoneBilling, a SuiteApp designed to work directly within NetSuite's interface, caught Sourcegraph's attention after a recommendation during their ASC 606 compliance process. Sourcegraph chose ZoneBilling based on four key criteria:

1. Strong usage-based billing capabilities: ZoneBilling was built to provide robust usage-based billing features to allow companies to handle various pricing models with precision. It supports complex scenarios such as variable rates, associated items, and different payment methods, ensuring accurate billing without manual intervention.
2. Native integration with NetSuite: ZoneBilling fully integrates with the company's existing NetSuite financial system and processes, supporting current workflows and allowing finance teams to streamline financial operations without ever leaving the NetSuite environment.
3. Connecting Salesforce and NetSuite: ZoneBilling enables automated bill creation upon deal closure in Salesforce, aligning sales and billing processes for real-time tracking. This integration also facilitates effective cross-sell and upsell strategies by ensuring that any subscription changes mid-term are reflected immediately in the recurring billing cycle.
4. Automated revenue recognition and compliance: ZoneBilling simplifies the revenue recognition process in NetSuite for all revenue recognition standards, particularly for ASC 606 compliance in Sourcegraph’s case. It automates the allocation of recurring revenue over the subscription period, as well as forecasting, recognition, reclassification, and auditing, all by extending the power of NetSuite’s Advanced Revenue Management (ARM) module.

“The biggest drivers towards adopting ZoneBilling were both the native integration with NetSuite and its robust usage-based billing capabilities.” - Samantha Ulrich-Herman, Accounting Manager at Sourcegraph

Sourcegraph’s external consulting partner, Connor Group, collaborated with ZoneBilling’s technical team to implement the solution, ensuring a smooth process and setting the finance team up for success. Being able to test everything in a sandbox environment before going live helped greatly to allay any fears or concerns Sourcegraph had with the live data.

‍“The integration with Salesforce and automated billing and revenue recognition that ZoneBilling gives us is still the most valuable to our finance team.” - Samantha Ulrich-Herman, Accounting Manager at Sourcegraph

The Results: Seamless Salesforce and NetSuite integration with 70% faster revenue recognition

ZoneBilling's automation capabilities have been a game-changer for Sourcegraph’s financial and accounting operations. By streamlining customer billing, revenue recognition, and reporting processes directly within NetSuite, Sourcegraph’s small accounting and FP&A teams were empowered to work with greater efficiency and intelligence. The company experienced improvements in the following areas:

• Revenue recognition time cut by 70%: With ZoneBilling, Sourcegraph’s accounting team eliminated manual calculations and reconciliations for recurring revenue. Previously, their team of three spent over five hours monthly on revenue recognition. Now, processing and reconciling revenue back to the ledgers takes just an hour and a half, saving each team member half a day of work every month.

• 72-hour billing capacity boost: Previously, the team manually created and filled in every invoice in NetSuite based on data available in SFDC. ZoneBilling’s automation has completely streamlined subscription billing in NetSuite, cutting out the manual work. Each member of the accounting team now saves two to three days monthly, allowing them to focus on higher-value tasks like analysis, reporting, and strategic initiatives like market entry and opportunity tracking.

• Data synchronization between Salesforce and NetSuite: Bi-directional synchronization between Salesforce and NetSuite ensures the team is confident in data integrity and financial accuracy. Bill creation in NetSuite now happens automatically upon deal closure in Salesforce, aligning sales and billing processes for real-time tracking. With this, upsell and cross-sell opportunities and any other subscription changes mid-term are reflected immediately in both platforms for efficient management without errors.

• ASC 606-enhanced billing and revenue recognition: The implementation of ASC 606 in Sourcegraph’s revenue management demanded a nuanced approach to billing and revenue recognition. ZoneBilling ensures that revenue is recognized under the ASC 606 standard as performance obligations are met, aligning revenue with actual usage and contractual terms. This meticulous process gives the team peace of mind that their financial data is not only accurate but also fully compliant with regulatory standards.

• Strategic collaboration with sales: ZoneBilling has transformed Sourcegraph's finance team into a strategic partner for the sales department. Finance now supports sales with financial data and analysis that inform strategic decision-making. With ZoneBilling’s automation, finance can generate accurate financial forecasts and customer billing scenarios in minutes using data flowing between Salesforce and NetSuite, helping sales craft competitive pricing and customized contract terms.

• Process automation and compliance: ZoneBilling’s automation streamlines Sourcegraph’s daily billing operations and also significantly diminishes the risk of errors. This precision ensures compliance with financial standards and regulations, enabling Sourcegraph’s finance team to better prepare for internal and external audits. It guarantees that all financial transactions are traceable and auditable.

• Enhanced data accuracy and management: ZoneBilling has allowed Sourcegraph’s accounting and FP&A teams to better track different revenue streams, contract amendments, and any other subscription changes that may occur at any point in time in businesses like Sourcegraph. Every financial decision is data-driven, and this accuracy and insight have been a reliable compass for business decisions as the company continues to grow and expand its customer base.

“ZoneBilling has been an easy-to-use billing and revenue recognition tool, saving us hours each month. Implementation was pretty smooth, and the confidence in data accuracy has been a big relief for us.” - Samantha Ulrich-Herman, Accounting Manager at Sourcegraph

ZoneBilling, a reliable solution for complex subscription billing and revenue recognition

ZoneBilling has proven to be an easy-to-use solution for Sourcegraph’s finance team, allowing them to seamlessly work inside NetSuite without leaving the platform. The company’s recurring billing and revenue recognition processes have been fully streamlined and automated, and with ZoneBilling’s scalability, the billing functions can grow in complexity smoothly without any hurdles as the business continues to grow. 

The biggest benefit from this implementation was the digital transformation brought by ZoneBilling, as it empowered Sourcegraph’s tiny, but mighty finance team to become strategic partners within the company, especially for the sales team, moving beyond traditional finance roles.

Looking further, Sourcegraph is considering moving to usage-based billing in the future on a larger scale, with ZoneBilling and other AR and reporting solutions from Zone & Co playing a crucial role in facilitating this shift.

“Our biggest goal the last two years has been to automate processes and clean up our data. ZoneBilling has helped us achieve both of these goals and more.” - Samantha Ulrich-Herman, Accounting Manager at Sourcegraph

3,000+ businesses like yours trust Zone & Co to solve their most complex billing problems in NetSuite. Book a demo today and see how you can bill and recognize revenue however you want in ERP, using ZoneBilling.

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