Revenue recognition is an accounting principle that determines the conditions under which income becomes realized as revenue. Generally, revenue is recognized only when a specific event has occurred and the amount of revenue is measurable.
For many finance professionals, revenue management is among the top challenges today. With its combination of loosely defined regulations, evolving interpretations, and penalties for noncompliance, revenue management creates complexity that can make revenue managers feel like they’re trying to hit a moving target.
New Revenue Recognition Standard
To add to the complexity, the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) are set to issue a new revenue recognition standard (Accounting Standards Update (ASU) 2014-09 Accounting Standards Codification (ASC) as Topic 606: Revenue from Contracts with Customers (ASC 606), and IFRS 15) that will replace most of the current U.S. industry standards. Under new US and international accounting guidelines, the revenue recognition methods are uniform and eliminate possible manipulation with a five-step process to recognize revenue:
- Identify contract(s) with a customer.
- Identify the separate performance obligations in the contract.
- Determine the transaction price.
- Allocate the transaction price to the separate performance obligations.
- Recognize revenue when the entity satisfies each performance obligation.
Revenue Recognition Software
Faced with these hurdles, companies are looking to automate revenue management processes to gain efficiency, strengthen compliance, and improve visibility. Mastering the complexity of revenue management starts with thoughtful processes designed with input from senior executives across the organization in combination with a technology partner that understands your business.
Only with those processes in place should you add technology like Intacct to automate revenue management. Intacct is the cloud-based accounting software that allows your finance team to connect systems, automate processes, and analyze the business. Intacct’s revenue management module automates and optimizes the financial processes associated with complex contractual relationships. This solution eliminates complicated spreadsheets that inevitably leads to errors, lost revenue, and compliance risks.
Intacct Revenue Recognition Module
With a solution like Intacct’s Revenue Management, you can maximize billing and collections, automate revenue deferral and revenue recognition, and optimize contract renewals. Intacct’s revenue management includes a wide variety of features and built-in reports to help forecast deferred and recognized revenue and ensure compliance with the SEC, FASB, and Sarbanes-Oxley.
- Connect with Project Management — Only Intacct connects project accounting to revenue recognition, using timesheets and completed milestones to automatically recognize revenue, while maintaining a separate billing schedule.
- Connect with Subscription Management — Intacct offers a preconfigured cloud connector with Zuora that enables subscription businesses to manage orders and transactions while simultaneously automating revenue recognition based on bookings data.
- Automate Revenue Deferral and Revenue Recognition — Set up revenue recognition rules for different types of products and services to post revenue automatically, based on flexible revenue recognition schedules.
- Automate Billing — Automatically generate billing schedules from contractual billing rules, leading to accurate, timely, and justifiable bills. The system is unique in that it also consolidates multiple billing types into a single bill and presents bills in multiple custom formats.
- Automate Subsequent Modifications — Automatically calculate deferred revenue and recognized revenue without tedious manual workarounds so you can control changes as they occur: hold and resume scheduled entries and project milestones, manage subscription upgrades and downgrades, cancel further revenue recognition for an item, or edit the posting date or amount of a transaction.
- Automate Add-ons — Intacct Revenue Management allows for flexible subscription and license add-ons and co-terminations that streamline the renewal process for you and your customers.
Why Cargas and Intacct?
At Cargas, we have a wealth of experience helping businesses understand the benefits of cloud accounting and revenue management. Using a best-in-class accounting software platform like Intacct can help your organization stay compliant and gain insight into revenue, cash flow and profitability that will allow you to make effective, strategic business decisions from anywhere, at anytime.
Our team of consultants are not only experts in Intacct, but are experienced CPA’s, manufacturing, distribution, and service experts as well as software engineers and Ph.D.’s. We offer the highest level of service and support to ensure success. Our approach has always been to help companies transform processes through software and gain a clear understanding of your business.
To learn more about Intacct software, revenue recognition and Cargas consulting services, call 888-611-3138 or contact us online. We look forward to answering all of your questions.