According to the American Psychological Association, up to 95 percent of college students have procrastinated on assignments, and these habits often spill over into their adult lives.
Indeed, putting things off isn't just a problem for students. A lot of businesses, such as Software-as-a-Service vendors and professional services firms, are struggling to even start transitioning to the new set of
FASB/IASB revenue recognition standards that first emerged in 2014. What can they do to finally get moving?
Why procrastination is an issue for the current revenue recognition transition
Finance teams are still getting acclimated to what the revenue recognition changes mean for them. Couple that with deadlines that are still years away - the rules do not take effect until December 2017 for public companies and December 2018 for private ones - and you have a potent recipe for procrastination.
"Many financial preparers don't have concrete plans yet for transitioning to the new rules."
In fact, a 2016 KPMG survey analyzed by the Journal of Accountancy found that less than 30 percent of corporate financial statement preparers had concrete plans for transitioning to the new rev rec standards; more than half (55 percent) were still taking time to assess the rule changes. Part of the delay could be due to the difficulties that teams encounter in trying to cope with the change by relying on old tools like Excel as well as manual processes.
Consider a subscription-dependent company, such as a SaaS provider. The updates codified in ASC 606 and IFRS 15 would require them to deal with fresh complexities, including:
- Reallocations during contract changes
- Regular deferrals of expenses
- Dual reporting (i.e., under old and new requirements) throughout the transition
- No longer performing revenue recognition on cash receipts
- Various impacts on forecasting and business growth
The traditional coping mechanisms are not helpful here. For example, a contract routed through the typical billing, accounting and forecasting processes would likely produce enormous spreadsheet sprawl, which in turn would lead to data entry errors, inconsistencies and needless redundancies.
Cloud financial software helps you dig into the details on rev rec.
What is needed is true automation via software that can streamline revenue recognition both in the future and during the transition. This way, SaaS vendors and others do not have to put off making the necessary changes. They can confidently shift from Excel-based processes to something more sustainable, without losing data or falling behind their growth trajectories.
A blueprint for adjusting to the updated revenue recognition rules
The shift to updated revenue recognition guidance won't happen overnight. For the remainder of the decade, organizations will take different steps each year as they plan, implement, analyze and go live with their accounting systems.
Where to start
The first steps should include:
- Reviewing existing policies and coming up with a transition plan
- Performing dual accounting to help with this planning
- Conducting any necessary technical upgrades or replacements
The last item offers a golden opportunity to invest in cloud financial software such as Intacct. Compared with Excel and legacy solutions such as QuickBooks, Intacct provides deep automation that helps modernize processes throughout the transition period. There is no need to wait until the last minute, only to make a few tweaks to an unstable set of Excel sheets.
The benefits of cloud ERP software with seamless automation
Implementing Intacct with an experienced partner like RKL eSolutions ensures that you have a long-term plan for adjusting to the big shifts in rev rec. Its deep, seamless automation runs the gamut from subscription billing and revenue management to expense management and reporting and analytics.
Beyond that, you get access to multi-entity global consolidation, along with tight integration with applications such as Salesforce.com for customer relationship management. Along the way, you also get the added benefit of having your particular needs and goals addressed by a trusted partner who can help you integrate with new and existing systems, provide ongoing education and assist with the re-engineering of your key processes. The business relationship doesn't stop after evaluating and selecting the right tools.
Don't wait – get started today making the transition with cloud accounting software.
