One of the most memorable quotes from the hit HBO series "Game of Thrones" is from its very first episode, in which Eddard Stark tells Catelyn Stark, regarding their son Bran, "He won't be a boy forever, and winter is coming." The last part of the line has been widely used to describe the onset of any looming, potentially problematic situation.
For many finance teams, the coming shift to a new set of revenue recognition guidelines, drawn up by the Financial Accounting Standards Board and the International Accounting Standards Board, is one such scenario. The updated guidance from FASB/IASB replaces the hundreds of industry-specific guidelines that were once included under U.S. Generally Accepted Accounting Practices.
Are today's businesses ready for the big transition? Here are three things they should understand about the impending changes in 2018 (for public companies) and 2019 (for private ones).
1. The new rules will affect your entire organization
Everyone from salespeople to accountants will have to adapt to the revisions codified in ASC 606. On the sales side, there could be alterations to contracts (which are set to become more heavily emphasized), product pricing, and bonuses. Likewise, finance teams will have to reevaluate their existing systems and manual processes, particularly the many that still depend on Excel sheets for reporting.
"Dual reporting is beyond the scope of many current everyday financial tools."
Specific requirements of the FASB/IASB rules apply to reallocations during contract changes, regular deferrals of expenses, no more revenue recognition on cash receipt, and the need for dual reporting. The latter is crucial, yet beyond the scope of many current everyday financial tools.
2. Old solutions won't be enough to cope
A lot of SMBs still rely on Excel, QuickBooks, and similar legacy solutions to manage their books. Unfortunately, the new rules are too complex for these systems to suffice. Teams will end up spending long hours reconciling numbers, resolving data-entry errors and struggling to share up-to-date information with others across the organization.
What the updated FASB/IASB regulations ultimately mean is that your team will need a more scalable and flexible solution, such as cloud accounting software, to survive the shift. Intacct is an ideal solution for all of your new requirements.
Winter may be coming, but it doesn't have to be tumultuous for professional services organizations.
3. Cloud financial software is the right fit for the updated standards
Sage Intacct gives you exactly what you need for the transition. It provides:
- Sophisticated revenue accounting
- Side-by-side reporting for old-versus-new standards
- Easy capture of subscription contract details
- Numerous integrations with other applications
- Forecasting based on revenue, billings, and expenses
As a modern cloud ERP system, Intacct gives you the flexible infrastructure and advanced capabilities that are essential for adjusting to the revised rules. It may seem like winter is coming, but you can keep the cold at bay by implementing Intacct as well as Adaptive Insights with the help of RKLeSolutions. A trusted and experienced partner, RKL will help you from start to finish in setting up a solution that is ideal for your specific situation.
