The new ASC 606 revenue recognition standard is a comprehensive revenue recognition model established to increase financial statement comparability across companies. ASC 606 affects all entities - public, private, and not-for-profit entering into contracts with customers to transfer goods or services or to transfer nonfinancial assets. Starting in 2018 for public companies and 2019 for private companies, this is the most encompassing revenue accounting change in 20 years.
If you are yet to begin the move, here are some considerations for adopting ASC 606
The impact of the new standard would be pervasive, more than just an accounting change, with impact across your organization
You would want to change your IT Systems for new business processes in-order to capture new data.
Sales and Marketing teams would wish to change their product offerings, structure of purchases, sales considerations and sales compensations.
Tax would want to address entity structure and tax planning.
Finance will have the opportunity to enhance organizational and operational controls to identify and capture contract obligations in addition to financial reporting.
These sweeping changes would require the collaborative insights of all the departments and significant time to implement.
Implementing ASC 606 takes at least an estimated 3 to 6 months, which could be shortened by parallel proccess planning.
Now the question is, how do you get in front of this change to take advantage of this opportunity? Jade Global is an international systems integrator with expertise in finance systems for ASC 606 (and principle based accounting standards in general) facilitating transition to the new standards. Revenue Recognition Management and Forecasting Solutions address the upcoming rules for Performance Obligation identification, Standalone Sales Price calculation, Revenue Reallocation, SSP calculation, reporting, and disclosure requirements using automation. This eliminates the need of spreadsheets, thereby creating time for Finance to add more value to the organization. These comprehensive solutions provide functionality to:
- Automate complex processes for all new ASC 606 rules
- Disclose the impact of the changes and solve onerous requirements for transitioning to the new rules with automated dual reporting
- Report the impact of the new rules on your organization’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 tracks to its operational model
- Afford Finance teams to focus on being value added business leaders
The proposed changes will present challenges for many organizations. Starting to plan now would provide you more time to fine tune, find bugs, find process issues, re-evaluate staffing levels, etc. This is an opportunity for your organization to reduce the stress during the move and ensure a smooth adoption. With over a decade of experience in implementing solutions for mid-size and large customers, Jade Global has the right mix of domain knowledge, system expertise, and technical skills to implement, optimize, and maintain operational systems. We have extensive experience in implementing financial systems with Oracle and NetSuite products, excelling in providing solutions and solving challenges that most organizations face on revenue recognition.