Revenue Cycle Best Practices

Finance professionals from the IAB’s CFO Council developed these Best Practices to significantly improve the efficiency and effectiveness of the revenue cycle by improving internal controls and processes, resulting in greater client satisfaction. The term revenue cycle refers to all of the steps required in the Sales, Operations and Credit & Collections processes to facilitate revenue recognition. This document is an educational tool for professionals in all departments of publisher organizations and addresses every step of the revenue cycle, from the Request for Proposal (RFP) to managing the Days Sales Outstanding (DSO).

The recommendations outlined in this document address two main areas:

1.) Interdepartmental communication between Credit & Collections, Sales and Operations
2.) Processes and controls that ensure the necessary steps are taken and approvals obtained prior to taking action

These Best Practices were developed by examining friction within the revenue cycle and determining the underlying causes and possible solutions. The document is organized by each revenue cycle phase (Request for Proposal, Proposal, Insertion Order (IO), Delivery and Optimization, Collections). Key recommendations include:

• Closely monitor open receivables greater than 60 days overdue, including documented actions and ramifications communicated to sales team
• Document processes for obtaining pricing approval
• Set up appropriate controls along the IO approval process to ensure that all aspects of the insertion order receive the necessary approval
• Collections team should hold regular meetings with Ad Sales Management and Sales Teams to discuss overdue receivables and problematic clients
• Establish a bad debt reserve consistent with company risk policies and process timeline

This document represents the fourth installment in a series of IAB process improvement initiatives. This series includes:

• On-Time Creative Delivery Toolkit
• Interactive Campaign Setup Best Practices
• Interactive Billing Methods Best Practices
• Revenue Cycle Best Practices

The general belief of the CFO Council is that improving overall interdepartmental communication will lead to improved efficiency in the revenue cycle. The IAB is confident that, if adopted, these Best Practices will enable publishers to improve their collection efforts, lower DSO, and improve cash flow.