New revenue recognition standards
The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have announced new guidance for contract revenue recognition. This change affects both public and private companies.
It is recommended companies review their contracts, possibly restate their revenue and develop a process going forward to change their procedures to comply with the new guidance.
The new change establishes a 5 step process for revenue recognition:
- Identify the contracts with the customer
- Identify the performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the performance obligations in the contract
- Recognize revenue when (or as) the entity satisfies a performance obligation
ProRata gives SaaS companies an easy way to manage and automate their revenue recognition process. For more information fill out the form to the right or watch our video below.