The new ASC 606 and IFRS 15 revenue management guidelines will have a major impact on public companies in 2018 and private companies in 2019. The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) will require companies to reallocate revenue each time a customer contract changes and defer expense recognition to align with the contract’s delivery. As a result, contract add-ons and renewals must be integrated into a single contract and will trigger re-allocations across both past and future periods, causing continuous revisions to revenue allocations and expense alignment.
Why You Should Take Action Now
Many organizations might think there’s plenty of time to meet this new standard. However, the influence of the new guidelines will impact companies much earlier, as any customer contract that extends beyond the start date will be effected. For example, if you are a public company using two-year contracts, you will be impacted immediately. Most companies will need to recast prior-period financial statements using the new guidelines in advance of the start date in order to provide proper comparative and future guidance to investors.
Can Your Current Financial Software Solution Handle ASC 606 and IFRS 15?
Another reason to act sooner than later is because your current financial software solution is unable to accommodate the new revenue management guidelines of ASC 606 and IFRS 15. You might need time to evaluate a new software solution as well as implement and go-live.
A solution to consider that can accommodate these new guidelines is Intacct cloud financial software. Intacct’s Contract and Revenue Management module fully addresses all of the upcoming rules for revenue reallocation and expense amortization with automation (not spreadsheets). The software enables companies to simultaneously manage revenue using both the current and new accounting guidelines—allowing them to operate under current guidelines and the new standards, simultaneously. Some of the areas the Intacct Contract and Revenue Management module address include:
Automating complex processes for addressing all new rules for revenue reallocation and expense amortization
Automated dual treatment at the transaction level
Solving the most onerous requirement for transitioning to the new rules with automated dual reporting
The ability to clearly see the impact of the new rules on the company’s future results with revenue and expense forecasts based on both current and new guidelines
Automate complex subscription billing, including usage-based billing, with full integration to revenue recognition
Ensure the business will track according to its operational model using instant insights into SaaS metrics
If your company will need to meet the new requirements for ASC 606 and IFRS 15, start planning now before it’s too late. Learn more about the Intacct Contract and Revenue Management solution by watching this quick video, https://www.intacct.com/videos/intacct-contract-and-revenue-management or contact The Resource Group, a leading Intacct cloud financial partner.
This content was originally posted here.
The new ASC 606 and IFRS 15 accounting standards—some of the most far-reaching changes to accounting since Sarbanes-Oxley—are only a few quarters away. Get ASC 606 Resources such as news, assets, and learn about the advantages Intacct provides in helping you address these changing rules with Intacct Contract Revenue Management and Contract and Subscription Billing.