Revenue recognition changed with the adoption of ASC 606 / IFRS 15, with what had been a judgment-based means of recognizing revenue turning into a principle-based process. Because the guidance was new, and due to the impact of COVID-19, regulatory authorities have taken a light touch in enforcing the more complex portions of the standard. However, as time progresses, these authorities have begun to tighten compliance requirements, with the SEC issuing more comment letters in 2022 than 2021. This represents the first time the count of comment letters has increased in years.
Whether a company has a full compliance office or is one that has human resources, legal, and finance filling the compliance role, the members of the compliance team need to be confident that the company is recognizing revenue in line with their contracts and with the tenets of ASC 606 or IFRS 15. The SOFTRAX Revenue Management System is a purpose-built solution representing this new era in revenue recognition that meets the requirements of ASC 606 and IFRS 15 compliance reporting.
The ASC 606 Standard has a five-step process for revenue recognition.
Different business processes – such as subscription billing and fulfillment – can trigger the most complex aspects of the standard, including the need to perform proportional allocations against Stand-Alone Selling Price (SSP), manage variable consideration, and handle complex contract modifications and combinations. The compliance team needs to make sure their teams understand what is needed to fulfill each step to ensure the reporting is being done correctly. SOFTRAX can help compliance teams with this understanding and reporting. The company has been helping compliance departments with ASC 606 since the introduction of the standard and has a deep history in revenue recognition.
ASC 606 / IFRS 15 involves recognizing revenue according to the terms of the contract. SOFTRAX helps companies monitor and report on all aspects of a contact that affect revenue, including:
All companies should look to automate the functions of revenue reporting required by ASC 606/IFRS 15, and for some functions, such as subscription billing, this automation is difficult to achieve due to ERP or legacy systems or other factors. SOFTRAX makes automation possible by delivering the only comprehensive solution that supports all forms of complex billing and revenue recognition in accordance with the new ASC 606/IFRS 15 standards. This unique system drives a high level of automation to advance your back-office functionality toward continuous accounting.
The SOFTRAX Revenue Management System is fully integrated with a proprietary, policy-based processing engine that features strong reporting and analytics that provide both analytical dashboards and customer-centric drill-down reports for revenue managers and senior executives alike. SOFTRAX Analytics allows users to customize, manage, and share out of the box reports at the summary and detailed level via simple drag and drop controls.