Over the past four days, we have compared different capabilities found within QuickBooks and NetSuite. On Tuesday, we started this series by reviewing the history of the two systems. On Wednesday, we reviewed the differences between real time processing and batch processing. This conversation led to another post on Thursday regarding the different ways data entry occurs between the two systems. All of these posts have been building up to our post today, which compares the differences in report capabilities between QuickBooks and NetSuite. To illustrate the differences, we will be comparing how each handles VSOE compliance.
When it comes to VSOE compliance, software companies should be tracking and reporting on a number of things. First and foremost is the sales price. Whatever software licensing model is chosen (perpetual, subscription, etc.) the price of each sale needs to be carefully tracked. Second, software companies should also be tracking and reporting on information regarding the timing of the revenue. Although this is not directly related to VSOE compliance, it is relevant for revenue recognition purposes. And finally, software companies should also consider generating reports on reviewing the success or failure of past projects so they can refine their VSOE estimates. This should include information such as the original estimate verses actual costs, so that salespeople can understand the true cost of delivery.
Reporting Capabilities of QuickBooks
Within the basic QuickBooks installation there are about 100 different default reports. These reports can be customized and modified to a user’s specifications. However, remember that reports are based upon system availability and data entry. Since QuickBooks is updated based on a batch system, the latest report may not actually contain the latest data. Instead the report will only contain the data that was last updated by the batch, which may have run anywhere from 24 hours to a month ago. In addition, the report is only as good as the data it was pulled from. If data entry mistakes occurred because of manual entry, the report will not contain the right information necessary for managers to make decisions.
Reporting Capabilities of NetSuite
Although NetSuite also offers default and customizable reports, the key to NetSuite’s reporting capabilities can be found within the processing and the data entry aspects of the system. Since the system is updated in real time, the system always contains the most up to date information. And since most of the data entry inputs can be automated, the risk of significant “fat finger” errors is reduced.
All of this has a major effect on calculating VSOE compliance. With QuickBooks, the system does not track the individual sales price of each element but only the contract as a whole. Instead, individual element pricing is stored in a spreadsheet, which makes VSOE compliance reports difficult to generate on demand. In addition, the system does not track the timing of revenue nor the original estimation of a bid. Add to this the complexity of tracking this information outside of the system, usually within spreadsheets, and the report capabilities of QuickBooks are actually slim to none.
On the other hand, NetSuite was built with revenue recognition and VSOE compliance in mind. All information is stored on a central database, including the price of individual elements and the past history. All of this can be used to create ad hoc management reports that contain point-in-time information and reduce the number of entry errors because of automation.