RSMUS.comIt has been several years since the ASC 606 revenue recognition standards introduced by the Financial Accounting Standards Board (FASB) took full effect. Companies are through the implementation phase by now and grappling with the realities of following these standards daily. Policies and best practices have been developed. That said, some companies are still struggling to comply with ASC 606 due to its complexity and ambiguity.
Many of those companies offer Software as a Service (SaaS). Revenue recognition can be difficult in any industry, but the unique nature of SaaS contracts introduces significant uncertainty, especially around recurring revenue. Issues like start-up fees, usage-based billing, and contract changes (among others) make revenue recognition more complicated for SaaS companies while raising the risk of accounting errors and violations.
SaaS accountants are well aware of these issues by now. What they’re still searching for is a practical solution. Sage Intacct is a cloud-based financial management solution that’s popular among SaaS providers because of how it simplifies and streamlines accounting for enterprise tech. ASC 606 is a prime example; not only can Sage Intacct handle advanced revenue recognition, but it can also make that process simple, certifiable, and scalable.
Anyone struggling with revenue recognition has a solution in Sage Intacct. Here’s how modern SaaS accountants are using this software to their advantage:
Streamlining Contract Management
SaaS contracts have three distinct phases: contract creation and drafting, contract negotiation and approval, and contract execution and administration. Any of these phases can have implications on revenue recognition requirements, just as every contract may contain unique terms and conditions, making it vital to have a centralized location for ALL contacts and ALL data.
Sage Intacct serves as that repository, ingesting data from multiple sources and extending access to anyone with an internet connection. Since multi-entity management is a specialty of Sage Intacct, accountants can see everything in one place to closely track complex contract terms and avoid the time and risk of integrating data manually.
Automating Revenue Recognition
Failure to comply with ASC 606 can result in fines, lawsuits, angry customers, and a tarnished reputation. SaaS companies need to get it right at all costs, but human errors are inevitable, making compliance a looming liability—unless humans can be removed from the equation.
Since Sage Intacct contains all contractual and financial data, the revenue recognition process can be automated based on parameters set by accountants. As revenue hits the system, Sage Intacct automatically brings it into compliance, eliminating the need to move, calculate, or discover any data manually. Automation improves data accuracy and supplies real-time revenue data for faster and smarter decision making.
Complying with Performance Obligation Tracking
Companies can only recognize revenue after meeting performance obligations associated with that revenue, according to ASC 606, which can get complicated in the world of SaaS. Sage Intacct can track those obligations to ensure accurate accounting and present the data in the form of a report or dashboard to keep stakeholders always informed.
Automating the allocation of transaction prices to performance obligations is another thing Sage Intacct can accomplish. SaaS accountants need visibility into contracts and revenue that’s broad, deep, and up-to-the-minute. Sage Intacct offers that all-encompassing perspective. More importantly, getting it takes minimal time and skill thanks to automation that handles the difficult details.
Enhancing Financial Reporting and Audit Readiness
Sage Intacct reinvents the financial reporting process by making financial reports easy enough for anyone to create yet still rich with data and insight. Reporting on ASC 606 compliance is no different. Templates make it easy to create and customize reports, and integrations with systems like Salesforce (and many others) bring as much data as possible into those reports.
The same transparent and traceable data that makes reporting so simple does the same for preparing ASC 606 audits. Companies are always audit-ready when all the required information is integrated and accessible. They can also adapt to evolving audit standards by making simple tweaks to the system.
RSM – Sage Intacct Specialists, SaaS Experts
After years of following developments around ASC 606, the team at RSM understands the challenges and solutions first-hand—and we know how to use Sage Intacct to streamline revenue recognition. The solution starts here.
