Best Tools to Calculate Revenue for Your Business
A man calculating revenue.
Many entrepreneurs are great leaders but struggle when it comes to business finance. Even revenue calculations can be a chore, but they must be done. Fortunately, there are many tools that can help you so that you don’t have to hire an accountant.
Here we’ll explain how to find the best tools to calculate revenue for your business.
Understanding Revenue Calculation
In a nutshell, revenue is the total amount of money that you bring in from sales. It’s the top line item on your profit and loss statement, and it’s the driving number for your business.
But there are two different components of revenue that you need to be aware of:
Gross revenue is the total amount of sales in a given period. For example, if you sell 100 units at a price of $50, your gross revenue is $5,000.
Net revenue is gross revenue minus returns and allowances. Returns are sales that are refunded, and allowances are discounts offered. Essentially, net revenue is the money you actually receive from sales.
Of course, there are other numbers that you have to calculate, including your costs and your profit. Profits are, of course, the ultimate goal, so you have to mark up your costs enough to generate a profit. You can use a markup calculator to find out what markup will give you the level of profit you want.
Manual Revenue Calculation Methods
The traditional way to calculate revenue was with a good old-fashioned spreadsheet, and some business owners still do it that way. This manual method can save you the costs of expensive software, but there’s more room for error. That’s why most businesses choose to invest in software tools. Using software can also save you significant time.
Somebody working on a digital spreadsheet calculating revenue
Best Tools for Revenue Calculations
You’ll need to shop around for the best software, but first you’ll need to know what you’re looking for. Here we’ll cover some types of software to consider.
Cloud-Based Accounting Software
Accounting software is a great one-stop option for calculating revenue and handling all the financial aspects of your business.
It allows you to efficiently manage all your financial transactions, including income, expenses, and invoicing. It can also automate your bookkeeping tasks, help you with invoicing and billing, manage your expenses, and generate your financial statements.
It can also help you manage your taxes with automatic tax calculations.
Some popular options include QuickBooks, Xero, and FreshBooks.
Invoicing and Payment Platforms
You can also use invoicing and payment platforms to automate your invoicing process which ensures that revenue-generating transactions are accurately recorded.
Invoicing platforms allow businesses to track the status of invoices in real-time. This helps in monitoring outstanding payments and understanding the revenue inflow at any given moment. Additionally, many invoicing platforms offer the option to generate receipts based on issued invoices.
Most invoicing platforms will integrate with accounting software.
Some popular options included PayPal, Wave, and Zoho.
Customer Relationship Management (CRM) Systems
Using a CRM can help you maximize your revenue by allowing you to manage your sales pipeline and analyze your sales performance. Some CRMs also allow you to track your revenue. One such solution that seamlessly integrates revenue tracking is the Salesforce Sage Integration, along with established options like Salesforce and HubSpot.
Business Intelligence (BI) and Analytics Tools
Business Intelligence (BI) and Analytics tools are software applications and platforms that help businesses collect, process, analyze, and visualize data, including revenue data, to gain valuable insights and make informed decisions. BI tools often also support the definition and monitoring of KPIs to track the business's performance against specific goals.
Some well-known BI and analytics tools are Tableau, Microsoft Power BI, and Google Analytics.
Point of Sale (POS) Systems
Point of Sale (POS) systems can play a role in revenue calculations for businesses, particularly those in the retail and hospitality industries. These systems are designed to process sales transactions and capture important data related to revenue generation.
Some popular POS systems for retail businesses include Square and Lightspeed.
Revenue Recognition Software
Revenue recognition software, also known as revenue management software or revenue automation software, is a tool designed to help businesses comply with revenue recognition standards and regulations. It can be particularly helpful for businesses with complex revenue streams, long-term contracts, or subscription-based models.
Tools for revenue recognition compliance include RevPro, and Aptitude Revenue Recognition Engine.
Factors to Consider When Choosing a Tool
A man standing in front of a white board thinking about what tool to use for calculating revenue.
There are several factors to consider when choosing tools to assist with revenue calculations.
Suitability for your business size and scalability, so it can handle larger amounts of data as your business grows
Integration capabilities with existing systems and accounting systems
User-friendliness and ease of implementation
Data security and privacy
Cost and pricing models
If you work with a CPA (certified public accountant), they can be a great resource for helping you decide what tools are best for your business.
Conclusion
Revenue is the driving force of your business, so it’s important to calculate it correctly. Luckily, in today’s world, there are a host of tools that can help you. The time they will save you makes them well worth the cost.
