Revenue recognition guidelines are evolving, and upcoming changes will pose challenges to companies of all shapes and sizes, especially as more businesses move or soon plan to move toward subscription and pay-as-you-consume pricing models. Automating revenue recognition is the best practice to ensure accurate, reliable and timely revenue reporting. If a company’s pricing model includes a high volume of transactions and any combination of subscription, usage or volume-based measures, then automating this process is not only a best practice, it is essential.
Unique to TRACT is a native subledger that easily applies complex revenue recognition guidance associated with US GAAP and IFRS and also provides the flexibility to quickly address the looming changes with the new pronouncements (e.g.: ASU No. 2014-09 and IFRS 15, Revenue from Contracts with Customers). This native platform capability applies dynamic charging/billing scenarios and recognize revenue on a daily or periodic basis as desired. Visibility into the smallest increments possible means better future forecasting, cleaner audit trails and faster times to close the books, especially for consumption-based offerings.
The native revenue recognition capabilities in TRACT can do the following:
- Manage revenue recognition on a daily or periodic basis taking into consideration various factors including but not limited to: service period, agreement length, customer lifetime metrics and milestones
- Automate allocation of agreement considerations across multiple units of accounting for every sale and/or order specific to your company’s revenue recognition policy
- Automate revenue recognition for multiple element arrangements in alignment with the current and future revenue recognition guidance
- Automatically or manually redistribute revenue changes in the subscription lifecycle (e.g., add-on, upgrade, downgrade, cancel)
- Define revenue recognition logic to invoke at time of change to a service
- Apply deferrals, triggering events, revenue catch up and contract allocations across multiple elements per your company’s revenue recognition criteria
- Generate amortization schedules and apply across contracts or order line items
- Recognize revenue and conversions for transactions conducted in foreign currencies
- Pause, resume, modify or cancel revenue recognition schedules already in progress
- Easily track transaction level, summary level, and segmented journal entries
- Post to external, company-wide General Ledger accounts based upon several different criteria, such as currency, account type, and product category (multiple GLs can be supported as well as multiple ERP solutions)
TRACT can serve the entire AR function (order-to-cash) or as the adjunct billing engine; either way, it syncs the relevant general ledger information to the master ERP. Pre-built connectors and a robust library of APIs allow legacy systems to stay in place, extending the life of the existing technology stack.