The 2018 effective date for the Financial Accounting Standards Board’s (FASB) Accounting Standards Update 2014-09, Revenue from Contracts with Customers, is fast approaching and PwC’s recently updated revenue recognition survey shows that 65% of companies are currently assessing the resulting impact on their business. The Big Four auditor is advising organizations globally that the required changes to systems, processes, and controls cannot be achieved overnight, the implementation effort should not be underestimated, and the time to act is now.
The first step is assessing the new accounting and disclosure requirements for all revenue transactions under the new guidance that will eliminate all existing guidance, and significantly expand the scope of revenue recognition disclosures. The core principle of the new model is that an organization will recognize revenue as it transfers goods or services to customers in an amount reflecting the consideration it expects to receive.
The accurate accrual and recognition of accounts receivable (AR) invoices that have not yet been paid, and the deduction of those invoices from AR once paid, is an extremely complex process when completed manually and will become even more complicated under the new standard. Leading finance automation provider, SoftCo, is encouraging organizations who are assessing their options to consider an automated solution for the collation and distribution of AR invoices, the generation of accounts receivable aging reports, and to enable compliant revenue recognition.
“This major update to the revenue recognition standard will impact the systems, processes, and controls implemented by finance functions worldwide. In order to avoid the risk of non-compliance and the cost of additional resources, we are encouraging finance managers to get in touch with us to discuss an automated solution.”
Garret Pearse, Senior Consultant, SoftCo
You can find out more about SoftCo’s solutions.