August 23, 2023: Success Factors for Consumption / Usage-Based Billing and ASC 606 / IFRS 15 Compliance

Since ASC 606 and IFRS 15 have taken effect auditors, particularly in the private sector, have had a soft touch in enforcing some of the most complex portions of the guidance. Reasons for this slower approach include allowing time for companies to learn the intricacies of the standards as well as a conservative approach to enforcement given post-pandemic economic conditions. What has happened, in part due to the extended leniency to enforcement, is that many companies moving to consumption billing are not aware that these complexities with ASC 606 / IFRS 15 exist.

Companies that are planning to launch or have recently launched consumption / usage-based billing models are faced with a learning curve to ASC 606 and IFRS 15 at a time that enforcement may be picking up. There was a rise in comment letters to the SEC 2022 and continuing in 2023, indicating that some form of tightening may have already begun.

In this webinar, SOFTRAX looked at the consumption / usage-based billing model, its features, and why it has become more popular. We looked at the areas of consumption / usage-based billing that can cause complexity with the ASC 606 and IFRS 15, including minimums, overage, and tiering. Finally, we tie these complexities into the revenue management process, including revenue recognition, contractual obligations, and billing.

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