There is a six-step process that management accountants can adopt to improve organisations’ revenue management strategies, said the Institute of Management Accountants (IMA) recently.
In its new Statement on Management Accounting (SMA), “Revenue Management Fundamentals,” the IMA describes the key ways management accountants can strengthen and accelerate the revenue management strategy and systems across all types of competitive organisations and industries.
“Organisations 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, vice president of research and policy at IMA.
According to the report, the six-step process is as follows:
- Do a quick assessment of the organisation’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
- Analyse the organisation’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 organisation’s strategy, and identify gaps in current managerial and accounting attention
- Design the appropriate level of revenue management and driver attention for the organisation, consistent with its strategy
- Establish a cross-functional team to implement new revenue management practices, supported by management accounting skill and tools
“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 organisation’s revenue management system and then redesign that system with optimal analytics and metrics that support the organisation’s strategic objectives,” Lawson advised.