The updated ASC 606 accounting standard came into effect for private companies on Jan 1, 2019. These guidelines introduce a fundamentally different model for recognizing revenue versus legacy generally accepted accounting principals (GAAP).
Are you ready for the new ASC 606 revenue recognition rules?
The new revenue recognition rules applies to nearly all types of revenue-generating transactions. So, if you are a technology integrator and have contracts with customers, then ASC 606 applies to you.
At BLC last week, regulation and compliance were hot topics of conversation. NSCA has long been telling members about the importance of getting ready for the new revenue recognition rules. Even so, many technology integrators seem to underestimate the importance of these changes.
Furthermore, systems integrators report that not having the right tools, or the right systems in place, creates additional roadblocks to embracing changes in reporting.
Q360 makes it easy for integrators to be compliant with ASC 606, and that is the topic of today’s video demo. Tofiq Indawala walks us through the revenue recognition method in Q360 and how the system automatically recognizes revenue on a periodic basis.
“On the screen, you’re seeing a specific project with various different columns. On the very right side, we see the budgeted column. The budgeted column is what we sold the project at. When that quote became a booked orders, it was $58,000. And then, there were various change orders that took place in the system, and that brought the project up to $110,000 in its respective cost at the bottom.”
“So, we’re able to track what the original project is, what the project looks like today with all the change orders, and if we, at any given point, want to see all the change orders, and what made up the $110,000, we can always look over in the orders invoice tab, which gives us a list of all the change orders that took place, and all the invoicing that took place over the course of that project.”
“We can also see what the current invoicing is, its actual cost, labor cost and miscellaneous cost. Then we have all the revenue that’s earned today. So, this is your P&L position. The Actual column is your cash position as to what you’ve invoiced a customer, and the Earned column is your P&L position, based on percent complete on the job.”
“The system automatically determines what revenue to recognize based on the cost that you’ve incurred to date. So, it’s automatically taking the cost – your projected cost, and your actual cost – to determine your percent complete, and it’s telling you that you need to recognize and additional $15,000 based on what’s already posted.”
As soon as I click on post project revenue, it is going to recognize our $15,000 revenue, and it will bring us up to the current revenue, based on percent complete.
The system does this on a daily basis. In the demo we do this manually, but the system can do this on a nightly basis, or multiple times throughout the day, or multiple times throughout the month. Whatever schedule you prefer.
Watch the video for the full demo