How ready are you to adopt the requirements of ASC 606? In a recent survey of 320 finance executives, 47% said implementing the new requirements into their financial system or revenue recognition spreadsheets would be their biggest challenge in the process. Hold it right there. This is not a change you want to tackle with system hacks and spreadsheets. If you try to throw people and workarounds at ASC 606, it will bury you.
At Intacct, we re-thought the ASC 606 issue from the ground up. We realized that the new requirements included information from multiple locations, including locations outside the standard transactional information we already capture. The result is a whole new module called Contracts. We added a new object to our arsenal—the Contract object. Within the contract, we gather together all the relevant revenue, billing, expense, and schedule information to solve the big and small issues brought on by ASC 606.
Ways we help you prepare
Avoid resorting to spiraling spreadsheets as your allocations and re-allocations grow. Intacct handles the new allocation rules through standard configuration, not custom scripting. This keeps you in control—not reliant on spreadsheets or IT. You’ll be able to easily configure new types of allocation and also intelligently select the right allocation based on the type of performance obligation. As you test and change allocation methods and rules, you can confidently ensure your accounting system isn’t a roadblock to applying the new rules.
2. Tightly connect billing and revenue recognition
Timing is everything, and both revenue recognition and expense amortization are tied to the delivery of the performance obligation. So with complex subscription billing, especially usage-based billing, you’ll enjoy full integration to your revenue recognition and expense amortization schedules through the contact object. You won’t have to rely on manual processes, and you’ll enjoy a greater level of consistency across your contracts.
3. Use dual reporting to forecast and reduce risk
Do you want to see how the new rules impact your bottom line compared to what you were doing? We thought of that too. Dual reporting according to both sets of rules ensures that you’ll understand the impact of ASC 606 long before your cut-over date. As the clock ticks down to implementation of the rule, you’ll have eliminated uncertainty, and also have a clear understanding of areas you need to fine tune by changing payment terms or reconfiguring performance obligations. On a side note, dual reporting is a requirement for transitioning to ASC 606.
4. Unify your accounting with upstream CRM and contract processes
As a long-time provider of built-in connectivity with Salesforce, Intacct has extended this integration to Contracts. This allows the contract to be defined upstream of hitting financials, eliminating data re-entry and ensuring a consistent customer experience.
5. Provide customer and contract visibility to stakeholders
It’s important that all stakeholders, from sales to executive staff, have visibility into how their actions affect revenue recognition under the new rules. Sales and delivery strategies can have a profound impact on revenue recognition and expense amortization under the new rules. Intacct makes this simple with easy-to-understand reporting that can demonstrate the financial impact of seemingly minor changes.
Since it’s currently available, Intacct Contract Revenue Management lets you get ready well ahead of your ASC 606 deadline. Use the pre-cutover time to really hone in on the best model for your business and make the cut-over a time to let technology handle the heavy lifting while you continue to grow and scale your business.
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.
Sage Intacct blog by Bob Shawgo.See how you compare with the results from a recent survey of top finance executives…….Read more.