IMA? (Institute of Management Accountants) recently released a new Statement on Management Accounting (SMA), Revenue Management Fundamentals, that describes key ways management accountants can strengthen and accelerate the revenue management strategy and systems across all types of competitive organizations and industries.
?Organizations can use the methodology outlined in this report to develop a revenue management approach where management accounting is an effective partner with other business functions,? said Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy.
The 38-page SMA provides an essential foundation to understanding revenue management as a discipline across many types of organizations. It also explains how management accountants can work effectively with their organization to design systems that capture and analyze specific types of revenue drivers in order to improve revenue management practices. The SMA presents a six-step process for improving an organization?s revenue management approach:
- Do a quick assessment of the organization?s use of the four revenue management levers (pricing-basis, inventory allocation, product configuration, and duration control)
- Review levels of revenue management details to determine current practice and understand different intensities of practice
- Analyze the organization?s business strategy and business environment to find issues that can assist or hinder revenue management improvement
- Evaluate revenue and cost driver importance in the organization?s strategy, and identify gaps in current managerial and accounting attention
- Design the appropriate level of revenue management and driver attention for the organization, consistent with its strategy
- Establish a cross-functional team to implement new revenue management practices, supported by management accounting skills and tools
?For the last century, management accountants have been successfully employing management models and establishing causal drivers in partnership with executives to achieve strategic objectives involving costs and investments. This same work can and should be accomplished with sales and revenue,? added Lawson. ?In partnership with marketing and sales functions, accountants can use this SMA to lay out a management model and causal driver approach that can be used to evaluate the sophistication of an organization?s revenue management system and then redesign that system with optimal analytics and metrics that support the organization?s strategic objectives.???
The report also includes case examples of companies to illustrate the different approaches to revenue management that firms can take, based on the four levers of revenue management.?
Visit the IMA website to learn more about this new SMA.