- December 6, 2017
- Posted by: massey17
- Category: Industry Solutions, Intacct, SaaS
Smart SaaS companies have been gearing up to face the challenges that accompany the new ASC 606 and IFRS 15 compliance guidelines on the horizon – for private companies, starting FY18 (or after December 15, 2017) and a year later for private companies.
No matter whether your company is public or private, it pays to plan ahead to ensure your teams have a good handle on what work will look like at the outset and in the long-run, to keep up with the added complexities without weighing down your team’s time.
ASC 606 Challenges
The FASB now requires that subscription revenues be allocated with greater frequency, and in a more comprehensive fashion, in order to simplify an inherently complex revenue model.
The changes now require that subscription-based service companies reallocate revenue every time a client adds on, renews or modifies their contract, with any changes being integrated into their existing contract, rather than in a new contract.
Further, companies are now expected to defer both expenses and revenues coinciding with contract delivery – not just at the time of add-on, but across the entire span of the contract, including those billing periods already closed.
To add to the complexity, companies are required to adjust active contract revenue to adhere to the new guidelines back through to contract start dates.
Leverage Customized Tools to Stay Compliant
For SaaS companies, these changes mean significant modifications to current internal processes and vast amounts of existing financial data, not only to bring current contracts up to compliance standards but to also adapt current systems to make room for the new guidelines going forward.
Because spreadsheets and manual workarounds cannot realistically accommodate the new ASC 606 guideline complexities, SaaS companies need another software option to adequately manage these new complexities.
Sage Intacct, a best-in-class financial management cloud software, offers solutions that fit the unique accounting concerns of subscription service-based companies. Their Contract and Revenue Management feature saves time and offers up-to-date support for the latest compliance guidelines:
- It is designed to accommodate the most recent ASC 606 and IFRS 15 Changes.
- Revenue allocation and expense amortization compliance guidelines are already built into the software feature.
- Teams rely on fast, ready-to-go automation from Sage Intacct to make adjustments and build reports, instead of digging through spreadsheets, re-keying endless manual entries, or seeking out IT support for help.
If you’re a subscription-based service company working on an in-house system, burning the candle at both ends to be ready for the compliance changes ahead, step back and take a deep breath. There’s a faster, better way.
Reach out to us! We can help you bring in a solution to be ready for ASC 606 and the new standards of compliance.