We previously touched on the importance of auditing pricing and deal construction processes. In our previous article on the benefits of putting your approvals into a Configure, Price, and Quote (CPQ) system, we referred to the audit trail that can be logged and generated by a well-designed CPQ system. The benefits don’t stop there. In this exploration into the real value of CPQ, let’s go a little deeper into the many ways CPQ can assist your organization’s auditability.
If you are in an area of a business that gets audited, we’re sure it’s not something that you look forward to. Being audited takes up a lot of time and can be stressful as something could be unearthed that gets your department into trouble. There is the chance that your practices could be exposed as ’in need of improvement.’ Finally, it’s a real pain to dig through old documents and folders to try and piece together the story of why someone did what they did, especially when it was several years ago.
We know audits are a necessary evil and are needed for an organization to prosper. We all dread the thought that our company might be caught up in a scandal like, like price-fixing, ripping off pensions, insider trading or serious accounting frauds like Enron.
In fact, it was scandals like Enron’s that gave rise to stricter audit requirements in the early 2000s, like Sarbanes-Oxley (SOX). This set a high standard required for internal controls, and exerted much tougher penalties for board members who fail to ensure that financial statements are accurate. The role of pricing decisions (e.g. who authorized what and when), and the accuracy of revenue reporting becomes paramount when evidencing compliance with audit arrangements such as this.
At this point, a CPQ system can be the simple answer to your audit needs. All requests for discounts, and the way revenue is allocated across products and services are documented. All approvals can be attributed to an individual, time stamped and with reasons captured at the time of approval. More importantly, it provides the ability to show an auditor the entire history of a decision. It connects the dots from a signed deal all the way to reported revenue at the click of a button. This means you have nothing to hide and a clear understanding of the decisions. This is music to an auditor’s ears. It builds confidence in the process and means any anomalies can be quickly analyzed too.
When you have all this information securely stored in the cloud under access control, with a tamper-proof process, that means it’s been designed with integrity in mind. It makes the process of passing an audit so much easier. All the anxiety and pain mentioned above just disappears. Auditors are no longer the enemy. You will find they can actually help advise on improvements to the rules in your system to make future audits even more enjoyable. Yes, that’s right, enjoyable audits!
So CPQ is an auditor’s friend, and an auditee’s friend too. It doesn’t just apply to the big-scale audit requirements like SOX, but any organization that’s auditable. Whether you’re a telecommunications company affected by IFRS 15, an organization impacted by GDPR, or any one of a thousand other guidelines, rules or quality policies that get checked - having data and decisions stored in a CPQ system will make you appreciate audits too.
* Originally published on walpolepartnership.com.