The Impact Of New IASB and FASB Revenue Recognition Standards
Automated revenue recognitions for NetSuite Financials can help accounting and finance professionals to stay abreast of revenue recognition. The task is complicated by rules like 09-03 regulations in multi-element transactions and EITF 08-01 changes. Many ERP systems aren’t keeping pace with these important changes. Finance organizations are sometimes required to monitor SAP productivity with spreadsheets when systems introduce non-compliance and error risks.
Netsuite revenue recognition automates the revenue recognition process by integrating ERP applications such as SAP R/3, Oracle Financials, or Netsuite ERP. The advanced revenue recognition platform offers support for revenue recognition standards. As a type of cloud solution, Netsuite advanced revenue recognition continually updates to incorporate the current revenue recognition rules. Reporting dashboards and automated revenue recognition calculations are added to help increase productivity, compliance, accuracy, and visibility.
Advanced Revenue Recognition
Netsuite advanced revenue recognition enables:
• Meeting current revenue recognition standards with efficiency
• Achieving AICPA, SEC, and FASB compliance, including EITF 09-03, EITF 08-01, EITF 00-21, SOP 97-2 & 98-9, SAB 101, and SOP 81-1
• Productivity and cost/time reduction improvements needed to calculate, record, and report revenue recognition
• Reducing or eliminating the need for spreadsheets, reducing errors, and achieving reliable and compliant processes
• Accuracy implementation by establishing proper reviews, approvals, and execution of revenues to be recognized
• Visibility and monitor throughout the entire revenue recognition process
• Extending current SAP R/3 or Oracle Financials deployment
• Staying on track with instant updates about current rule changes regarding revenue recognition
• Automation of the revenue recognition processes, integrating with a variety of ERP applications.
Challenges of Revenue Management
Revenue management is a challenging task for many finance professionals. Effective revenue management requires the professional to understand evolving standards and sometimes loosely-defined regulations such as the Accounting Standards Codification 606 (ASC 606). Penalties for noncompliance are still. When faced with these sorts of challenges, companies want to automate the revenue management process to create efficiency, compliance, and visibility.
The ability to deploy technology to streamline, centralize, and automate the revenue management process is essential. Cloud-based technology allows the finance team to analyze the business better by connecting systems and automating processes. It frees the finance team from revenue management headaches and removes the need to manage manual processes.
Revenue management complexity is a serious challenge today. Only quite recently have businesses been able to stay on competitive track by developing or delivering newer products or services to meet customer demands. Because companies also need to identify innovative solutions to generating revenues, they need many ways to account for it. At the same time, regulatory frameworks place more compliance demands on businesses of all sizes and industries. For that reason, finance professionals must management revenues from contracts, transactions, and subscriptions that are more complex than ever. A constantly changing maze of requirements, rules, and nuances is used to manage revenue accounting.
Unfortunately, some finance teams continue to struggle with the needs of revenue management by using manual tools. These tools increase the risk of errors and the internal process becomes ever more complex. Simultaneously, business management needs to see results in real-time to improve revenue forecast accuracy for the next quarter or fiscal year. Outdated spreadsheets or manual reconciliation methods are not up to the task of managing increasing scale and complexity of revenue recognition as challenges of management reporting.
Regulatory compliance guidance from the American Institute of Certified Public Accountants (AICPA), the Financing Accounting Standards Board (FASB), and the Securities Exchange Commission (SEC) is confusing to many financial managers. Revenue managers are sometimes frustrated by frequent changes. It’s difficult to interpret new changes and apply changes with consistency, especially when many businesses create non-standard customer agreements today.
To increase the complexity, both the FASB and the International Accounting Standards Board (IASB) have issued new revenue recognition standards that replace current standards for fiscal periods that end on December 15, 2017 (and for periods that end after that date). Financial experts recognize the guidance as significant.
Businesses and organizations of all sizes must comply with the new standards. Without advanced revenue recognition tools that streamline the ever-increasing complexities, finance professionals fall short of their duties to increase revenue recognition accuracy and organizational productivity.