Intacct, a provider of cloud ERP software, announced the launch of Intacct Contract and Revenue Management. The new offering marks the industry's first automated solution to help companies navigate the complexities created by the upcoming ASC 606 and IFRS 15 revenue recognition guidelines, which otherwise could burden and overwhelm finance teams with the most sweeping accounting changes in over a decade.
Intacct Contract and Revenue Management is a new module for Intacct’s cloud ERP solution that fully addresses all the upcoming rules for revenue reallocation and expense amortization—using automation, not spreadsheets and a lot of accountants' time. This comprehensive solution provides out-of-the-box functionality that reduces dependence on IT resources and doesn't require complicated scripting.
Starting in 2018 for public companies and 2019 for private companies, ASC 606 and IFRS 15 revenue management guidelines from the Federal Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) will require companies to reallocate revenue each time a customer contract changes and defer expense recognition to align with the contract's delivery. As a result, contract add-ons and renewals must be integrated into a single contract and will trigger reallocations across both past and future periods, causing continuous revisions to revenue allocations and expense alignment.
Although the new accounting standards go into effect in 2018, the influence of the new guidelines will impact companies much earlier, as any customer contract that extends beyond the start date will be effected. For example, a public company using two-year contracts would be impacted immediately. Furthermore, most companies will need to recast prior-period financial statements using the new guidelines in advance of the start date in order to provide proper comparative and future guidance to investors.
In a recent Intacct survey of 320 finance executives at mid-sized companies, less than 10 percent of respondents had started to take the necessary steps to address the new standards. In addition, nearly half (47%) said that implementing the new requirements into their financial system or revenue recognition spreadsheets would be their biggest challenge to addressing the new rules.
“Companies affected by the new rules will find that conforming to them will be a major undertaking,” Robert Kugel, research director at Ventana Research, a research and advisory services firm, said a statement. “These changes necessitate an extensive review of contracting and accounting policies and processes, and will likely require changes to procedures and—above all—systems.”
“Companies with even moderately complex customer contracts are going to find that the new rules will have extensive impacts best dealt with by software designed specifically to handle the new requirements,” Kugel added. “Using spreadsheets to manage revenue recognition is not an option, because the complexity of the new standards will add substantially to their accounting staff workloads and increase the probability of errors and misstatements.”
Intacct Contract and Revenue Management is designed to make companies audit-ready, while delivering the continuous insights needed to make their financial future predictable. The new software enables companies to simultaneously manage revenue using both the current and new accounting guidelines, allowing them to operate under current guidelines and the new standards, simultaneously.
Intacct Contract and Revenue Management enables finance teams to:
Automate complex processes for addressing all new rules for revenue reallocation and expense amortization;
Disclose the impact of changes with confidence with automated dual treatment at the transaction-level;
Solve the most onerous requirement for transitioning to the new rules with automated dual reporting;
Clearly see the impact of the new rules on the company's future results with revenue and expense forecasts based on both current and new guidelines;
Automate complex subscription billing, including usage-based billing, with full integration to revenue recognition; and
Ensure the business will track according to its operational model using instant insights into SaaS metrics.
For joint Intacct and Salesforce customers, Intacct Contract and Revenue Management also enables companies to structure workflows to capture and edit contracts natively in Salesforce. There is no need to import contracts using additional integration software or by rekeying them into Intacct—streamlining processes and eliminating potential errors.
“It will be near impossible to do all of the revenue reallocation manually due to the sheer volume of contracts and adjustments that will be required for subscription-based businesses” said Dan Miller, vice president of product management for Intacct. “With Intacct Contract and Revenue Management, companies will be able to easily and seamlessly manage their transition to the new accounting standards without using complex workarounds, bolt-on solution, scripting that may break over time, or hiring a significant amount of additional accountants.”
Intacct Contract and Revenue Management is now generally available from Intacct and its network of channel partners as part of Intacct 2016 Release 2. Watch a video overview of Intacct Contract and Revenue Management here.