Revenue Recognition – Are you Ready?
Revenue Recognition (Rev Rec) is becoming a standard feature within many billing systems today as it becomes a new focus in response to new policies and regulations. In 2014, the Financial Accounting Standards Board (FASB) issued an update to the Generally Accepted Accounting Principles (GAAP) that has taken effect this year, and will continue to take effect in 2017 and 2018. These new standards (ASU No. 2014-09) will change the way companies are allowed to recognize and report revenue. This means that enterprises will need a Rev Rec tool that allows them to do accurate reporting, accurately track financial obligations, complies with the new GAAP standards and is flexible enough to quickly evolve to meet future standards. This all needs to be done in an efficient and seamless manner that easily conforms to your unique business model and strategic initiatives – and this is what BillingPlatform’s Rev Rec accomplishes.
BillingPlatform Rev Rec
Rev Rec in BillingPlatform is broken down into three categories:
1) Point-In-Time Rev Rec,
2) Scheduled Rev Rec, and
3) Obligations Rev Rec – a special feature unique to BillingPlatform.
Point-In-Time Rev Rec is the most basic feature and allows companies to recognize revenue as soon as an invoice goes out or when a service is rendered to the customer.
Scheduled Rev Rec allows companies to recognize revenue based on a set interval of time. This could be daily, weekly, monthly, or a custom time interval and can be different for each individual contract, customer, or group of customers.
Obligations Rev Rec allows companies to recognize revenue based on milestones set in the system. These revenue events can be anything that’s relevant to each individual company or contract, such as the completion of a job, a purchase order, the creation of an invoice, a usage threshold, etc. Revenue recognition can also be broken down into segments, with each part of the revenue recognized during a different event or time-frame.
This can be helpful during installations, for example, when a customer is charged half upfront and half when the installation is completed. The system can be configured to recognize the revenue up-front or at the upon completion of the installation - and the possibilities far exceed this simple example.
Because of our Metadata model, Rev Rec in BillingPlatform can be defined based on any element of the system, making it easy to customize to fit any scenario. We understand enterprise needs and accommodate extreme complexities in billing, rating and invoicing. Now, we extend that same capability to Revenue Recognition making it possible to stay compliant and keep business running regardless of industry, geography or strategic objective.