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Learn about ASC 606 automation for software companies, including key strategies and tools to streamline compliance and improve financial accuracy.
For a growing software company, the manual processes that once worked are starting to show their cracks. Spreadsheets get tangled, the month-end close becomes a frantic scramble, and the fear of a difficult audit looms large. The complexities of ASC 606—with its rules on bundled services, contract modifications, and performance obligations—only add to the pressure. You need a system that can keep up with your success, not hold it back. This guide will walk you through the challenges of the revenue recognition standard and explain how implementing ASC 606 automation for software companies can build a solid financial foundation for sustainable growth.
If you’re in the software business, you’ve probably heard the term “ASC 606” tossed around. It might sound like just another piece of accounting jargon, but it’s a standard that fundamentally changes how you report the money you earn. Getting it right isn’t just about staying compliant; it’s about gaining a crystal-clear view of your company's financial performance, which is essential for making smart, strategic decisions. For software and SaaS companies with complex contracts and recurring revenue models, understanding this framework is non-negotiable. Let's break down what it is and why it’s so important for your business.
At its core, ASC 606 is a set of rules that standardizes how companies report revenue from customer contracts. Before it was introduced, different industries had different ways of booking revenue, which made it tough to compare financial statements. The Financial Accounting Standards Board (FASB) created ASC 606 to establish a single, comprehensive revenue recognition model for all companies, regardless of their industry or location. Think of it as a universal language for revenue. It ensures that whether you're selling software subscriptions or physical products, you're reporting your earnings in a consistent and transparent way that investors and stakeholders can actually understand and trust.
The biggest change ASC 606 introduced is its five-step framework for recognizing revenue. This model gives you a clear path to follow for every customer contract, taking the guesswork out of the process. The steps are:
This structured approach is designed to help you accurately reflect the value you deliver over time, which is a huge shift from older, more rigid accounting methods. You can find more details on financial operations in the HubiFi blog.
For software and especially SaaS companies, ASC 606 is a game-changer. Your contracts often aren't simple one-time sales; they're complex bundles of services like initial setup, ongoing support, training, and future updates. ASC 606 requires you to unbundle these "performance obligations" and recognize revenue for each one as it's delivered. This directly impacts how you calculate critical metrics like Annual Recurring Revenue (ARR) and Customer Lifetime Value (CLV). Getting this right is crucial for accurate financial reporting, securing funding, and planning for growth. With the right systems in place, you can manage these complexities seamlessly. HubiFi offers seamless integrations with your existing ERP and CRM to make this process much smoother.
Adopting ASC 606 can feel like a major undertaking, especially for software and SaaS companies. Your business models are dynamic, with contracts that often have many moving parts. While the standard aims for clarity, getting there means working through some common, and sometimes tricky, challenges.
Recognizing these hurdles is the first step toward creating a clear path to compliance. From tangled contracts to the strain on your team, these are the issues that most software companies face when they tackle revenue recognition. Understanding them helps you prepare for what's ahead and find the right tools to make the process smoother. Let's walk through the five most common obstacles you might encounter.
Software contracts are rarely simple. You’re likely bundling multiple services—like software licenses, implementation fees, customer support, and training—into a single agreement. Under ASC 606, you can't just recognize the total contract value upfront. You have to identify each separate performance obligation and allocate revenue to it accordingly. This often means your team needs to set up a whole new way of tracking these details in your ERP. Manually separating these bundled services for every single contract is not only time-consuming but also a huge source of potential errors. It’s a detailed process that requires a system built to handle that complexity without relying on endless spreadsheets.
Does your pricing change based on usage, user count, or performance milestones? This is common in SaaS, but it adds another layer of difficulty to ASC 606. This variable consideration means the total transaction price isn't fixed, and you have to estimate the revenue you expect to earn. These accounting judgments can cause revenue to look inconsistent from one period to the next, making it tough to compare financial performance or create reliable forecasts. If you offer discounts, rebates, or credits, you have to account for those, too. Managing this variability requires a system that can handle sophisticated estimates and adjust them as new information becomes available.
If you’re still relying on spreadsheets or an outdated accounting system to manage revenue, ASC 606 will quickly expose its limitations. The standard’s requirements for detailed tracking, allocation, and reporting are often too much for manual processes to handle. This is why having a capable Enterprise Resource Planning (ERP) system is so important for managing these new rules. You need a solution that can automate calculations, manage contract modifications, and provide a clear audit trail. A systems overhaul might sound daunting, but it’s a necessary step to ensure accuracy, save your team countless hours, and build a scalable foundation for your company’s growth.
With the implementation of ASC 606, you can bet that auditors are paying closer attention to how companies recognize revenue. They will want to see detailed documentation supporting your judgments, from how you identified performance obligations to how you allocated the transaction price. Any mistakes or inconsistencies can lead to audit problems, financial restatements, and a loss of investor confidence. Getting your revenue recognition wrong can even lead to poor business decisions based on inaccurate data. Preparing for this scrutiny means having your processes and documentation in order from day one. An automated system provides the transparent, traceable data that makes passing an audit a much less stressful experience.
ASC 606 isn’t just a finance problem—it impacts your entire organization. Your sales team’s commission plans might need adjustments, and your legal team has to understand how contract terms affect revenue. Getting everyone on the same page is critical. The finance team often bears the brunt of the work, spending long hours on manual calculations and reconciliations, which can lead to burnout and costly mistakes. It’s important to prepare your teams for this change by providing clear training and the right tools. Automating the heavy lifting frees up your team to focus on strategic analysis instead of getting bogged down in manual data entry, making the transition smoother for everyone involved.
Trying to manage ASC 606 compliance with spreadsheets is like trying to build a house with only a screwdriver—it’s slow, frustrating, and leaves a lot of room for error. Automation is the power tool that changes the game. It takes the complex, rule-based nature of ASC 606 and turns it into a streamlined, reliable system. Instead of spending weeks wrestling with data, your team can focus on strategy and growth. By automating revenue recognition, you not only ensure compliance but also create a more efficient and accurate financial foundation for your entire business. It’s about working smarter, not harder, to meet these critical accounting standards.
Manual revenue recognition is a tedious process that can easily bog down your finance team at the end of every month. Automation software transforms this workflow by handling the heavy lifting for you. It automatically applies the five steps of ASC 606 to your contracts, identifying performance obligations and allocating transaction prices without manual intervention. This means revenue is recorded correctly and on time, every single time. Your team gets to ditch the complex spreadsheets and reclaim valuable hours, allowing them to focus on financial analysis rather than just data entry. This streamlined process is essential for keeping up with the demands of a growing software business.
Let’s be honest: manual data entry is a recipe for errors. A single misplaced decimal or an incorrect formula in a spreadsheet can throw off your entire financial statement, putting your compliance at risk. Automation eliminates this threat by creating a direct, error-proof link between your sales data and your revenue recognition process. By removing manual touchpoints, you ensure that revenue is matched perfectly to the right contracts and performance obligations. This level of precision is exactly what ASC 606 demands. An automated system gives you financial reports you can trust, which is critical for passing audits and making sound business decisions.
With manual processes, you often have to wait until the end of the month or quarter to get a clear picture of your financial health. Automation changes that by providing real-time reports and dashboards. You can instantly see both recognized and deferred revenue, track key performance indicators, and forecast future earnings with confidence. This immediate access to data allows you to be proactive instead of reactive. You can spot trends, identify issues, and make strategic adjustments on the fly. For more ideas on leveraging financial data, you can find helpful insights in the HubiFi blog.
Software contracts are rarely simple. They often include multiple services, variable pricing, and custom terms that make ASC 606 compliance a major challenge. Automation simplifies contract management by systematically breaking down each agreement. The software can identify distinct performance obligations, handle modifications, and apply the correct revenue rules automatically, even for the most complex bundled deals. It also creates a centralized, auditable record of all your contracts. This is especially helpful for companies that have grown through mergers and acquisitions and need to standardize a diverse set of legacy agreements.
ASC 606 isn’t a "set it and forget it" standard. As your business evolves, your contracts change, and your pricing models adapt, you need to ensure you remain compliant. Automation tools act as your dedicated watchdog, continuously monitoring your revenue recognition activities to ensure they align with ASC 606 requirements. This ongoing oversight provides peace of mind and significantly reduces risk. The most effective systems achieve this through seamless integrations with your existing ERP and CRM. If an issue arises, the system can flag it for review immediately, ensuring your financial reporting stays accurate and defensible.
Choosing the right automation tool is a big decision, but it doesn't have to be overwhelming. Think of it as hiring a specialist for your team—one that works 24/7 to keep your revenue recognition accurate, compliant, and stress-free. The goal is to find a solution that not only handles the complexities of ASC 606 but also fits seamlessly into your existing workflow and can grow with you. A great tool will do more than just check a compliance box; it will give you clearer financial insights to make smarter business decisions. As you evaluate your options, focus on these key features to ensure you’re picking a partner that will truly support your company’s financial health and long-term growth.
Your software company is unique, and your revenue streams probably reflect that. You might have a mix of subscription fees, one-time licenses, professional services, and usage-based billing. A rigid, one-size-fits-all automation tool just won’t cut it. Look for a solution that lets you set up flexible rules for different ways your business makes money. The system should be able to distinguish between these streams and apply the correct ASC 606 principles to each one automatically. This adaptability is crucial for maintaining compliance as you introduce new products or pricing models, ensuring your financial reporting always keeps pace with your business strategy.
Under ASC 606, revenue is recognized when you fulfill a performance obligation, not just when you send an invoice. That’s why your automation tool needs to operate on event-based triggers. It should record revenue based on specific events, like when a software license is activated, a project milestone is met, or a customer uses a certain amount of your service. This approach provides a much more accurate picture of your company’s financial performance in real-time. It moves you away from outdated, invoice-based methods and aligns your accounting directly with the value you deliver to customers, which is the core principle of the standard.
If you bundle products or services together in a single contract, you need to allocate the transaction price to each distinct item based on its Standalone Selling Price (SSP). Figuring this out manually can be a nightmare of spreadsheets and guesswork. A powerful automation tool can handle this for you. It should be able to analyze historical sales data to automatically and consistently determine the SSP for each performance obligation. This not only saves your finance team countless hours but also creates a defensible, data-backed methodology that will stand up to auditor scrutiny, making your financial statements more reliable.
Software contracts are rarely static. Customers upgrade, downgrade, add users, or modify their service terms all the time. Each of these changes is a contract modification that impacts revenue recognition. Manually recalculating revenue for every change is tedious and a major source of errors. Your automation software should handle these modifications seamlessly. When a contract changes, the tool should automatically update the revenue schedule and reallocate costs without requiring manual intervention. This ensures your revenue reporting stays accurate and up-to-date, no matter how often your customer agreements evolve.
Compliance isn't just about getting the numbers right; it's about being able to prove it. Your ASC 606 tool should provide clear, comprehensive reporting and dashboard features. You need more than a data dump—you need actionable insights. Look for a solution that offers ready-made reports for disclosures, waterfall schedules, and reconciliations. It should give you a transparent view of your revenue data, showing both deferred and recognized revenue clearly. The ability to schedule a demo and see these reporting capabilities firsthand is often the best way to gauge if a tool will give you the visibility you need.
An automation tool that doesn’t play well with your other systems will only create more work. It’s essential that your chosen solution offers seamless integrations with your ERP and other critical software like your CRM. The tool should be able to pull order data from your CRM, process it according to ASC 606 rules, and then automatically post the correct journal entries to your ERP. This end-to-end automation eliminates manual data entry, reduces the risk of errors, and ensures that all your key financial systems are perfectly in sync, creating a single source of truth for your revenue data.
The solution you choose today should be able to support you tomorrow. As your company grows, you’ll likely add new products, expand into new markets, and adopt different sales methods. Your revenue recognition process will only get more complex. You'll need to keep updating your systems to stay compliant as your business evolves. Therefore, look for a scalable platform that can handle increasing transaction volumes and adapt to new business models without requiring a complete overhaul. A scalable tool ensures that your investment continues to pay off as you grow.
Choosing the right automation tool is a big decision, but it doesn't have to be overwhelming. The market offers a variety of solutions, each with its own strengths. Some are built for specific industries, while others offer broad, all-in-one platforms. To help you find the best fit for your software company, let's walk through some of the leading options available. We'll look at what makes each one unique so you can compare them against your specific needs for compliance, integration, and growth.
HubiFi offers a powerful, comprehensive solution for automating revenue recognition that is specifically designed to streamline financial processes for software companies. It excels at handling high volumes of transactions, ensuring your data is always accurate and compliant with ASC 606. The platform is built to integrate disparate data sources, giving you a single source of truth for your financials. This not only helps you close your books faster and pass audits with confidence but also provides the real-time analytics and dynamic segmentation you need to make smarter strategic decisions. If you're looking for a system that grows with you and simplifies complex compliance, HubiFi is a fantastic choice.
RightRev provides specialized software that helps businesses adhere to both ASC 606 and its international counterpart, IFRS 15. The platform focuses on automating the entire revenue recognition process, ensuring that your company records revenue accurately and at the correct time. It’s designed to take the manual guesswork out of compliance by applying the right rules to different revenue streams automatically. For companies operating in both domestic and international markets, RightRev’s dual-standard capability makes it a strong contender for maintaining global compliance without needing separate systems or processes.
If you run a B2B subscription business, Younium is a tool you’ll want to consider. It’s designed specifically to manage the financial complexities that come with subscription models, such as handling contract modifications, upgrades, and downgrades. This focus allows it to provide robust tools that ensure ongoing ASC 606 compliance even as your customer contracts evolve. By specializing in the B2B subscription space, Younium addresses the unique challenges of recurring revenue, making it one of the best revenue recognition software options for companies in this niche.
For companies with diverse and complex operations, NetSuite offers a leading, all-in-one solution. It provides a unified platform that can track revenue from every single sale, regardless of the channel or business model. This comprehensive approach ensures that all revenue streams are managed under one roof, simplifying ASC 606 compliance across the entire organization. NetSuite is particularly well-suited for businesses that are scaling quickly or have multiple product lines, as its integrated system provides a holistic view of financial performance while keeping everything compliant.
Sage Intacct is known for its ability to accelerate the monthly financial close. It achieves this by using smart templates and workflows that automate complex revenue recognition tasks. The platform is particularly effective at managing intricate contracts with multiple performance obligations, making it a solid choice for ensuring ASC 606 compliance without slowing down your finance team. If your primary goal is to close the books faster while maintaining accuracy and control over your revenue processes, Sage Intacct offers the features to help you get there.
Salesforce Revenue Cloud stands out by integrating revenue management directly with your customer data. It uses AI to analyze customer behavior and predict how revenue should be recognized, aligning your financial operations with the customer lifecycle. This connection provides a unique advantage, as it ties revenue recognition directly to customer actions and milestones, which is a core principle of ASC 606. For businesses already invested in the Salesforce ecosystem, this tool offers a seamless way to manage revenue from quote-to-cash while gaining deeper insights into customer value.
Maxio is another tool tailored specifically for the B2B SaaS industry. It goes beyond basic compliance by providing deep financial insights into key SaaS metrics like customer lifetime value and churn. The platform uses its own predictive analytics to help you forecast future earnings accurately while remaining fully compliant with ASC 606. For SaaS leaders who need to understand the financial health of their subscription base, Maxio offers a powerful combination of revenue recognition automation and sophisticated business intelligence tools.
Accounting Seed is built to capture and apply revenue recognition rules in real-time, as transactions happen. This approach ensures a high degree of accuracy from the very beginning, eliminating the need for cumbersome end-of-month adjustments. By automating the process at the point of transaction, it helps facilitate a much faster financial close. For businesses looking for a solution that embeds compliance directly into their daily operations, Accounting Seed offers a dynamic and efficient way to manage revenue in line with ASC 606 standards.
Picking the right automation tool is a big decision, but it doesn't have to be overwhelming. When you break it down into clear steps, you can find a solution that fits your business like a glove and sets you up for long-term success. Think of this as building a solid foundation for your financial operations—a little planning now saves a lot of headaches later. The goal is to find a partner, not just a piece of software, that will help you streamline compliance and get back to growing your business.
Before you even look at a demo, take a moment to look inward. Every software company is different, so a one-size-fits-all solution rarely works. Get your teams together—sales, marketing, finance, and product—to talk through your processes. According to Bridgepoint Consulting, it's vital that everyone understands "how products are sold, discounted, and delivered." Do you bundle services? Offer complex subscription tiers? Have unique performance obligations? Answering these questions first helps you create a clear checklist of must-have features, ensuring you choose a tool that solves your specific ASC 606 challenges.
Your new automation tool needs to play well with your existing systems. The last thing you want is a powerful platform that operates in a silo. Map out your current tech stack, especially your ERP and CRM. You need to "figure out exactly what needs to be changed or added in your ERP system" to accommodate a new tool. This includes everything from item setups to transaction details. Having a clear picture of your integration requirements will help you quickly vet potential solutions and avoid implementation nightmares. A seamless connection between systems is what makes true automation possible.
When you're comparing tools, look beyond the initial price tag. A cheaper option might cost you more in the long run if it requires manual workarounds or doesn't scale with you. As the experts at Younium suggest, ask yourself a few key questions: Does it fit your business model? Does it follow the rules? How difficult is the setup? And what's the real cost, including implementation and training? The best solution offers transparent pricing information and a clear return on investment by saving your team countless hours, improving accuracy, and making audits less stressful.
A successful rollout depends on your team. The best software is only effective if people know how and why to use it. From the start, "get people from finance, IT, and operations involved" in the selection and implementation process. This creates a sense of ownership and ensures everyone's needs are met. Work with your chosen provider to create a clear implementation timeline and a comprehensive training plan. A hands-on demo with an expert can be a great first step to make sure your team feels confident and prepared to use the new system from day one.
Choosing and implementing an ASC 606 automation tool is a huge step forward. But the real magic happens when you start using its full potential to not just stay compliant, but to actively grow your business. Think of it less as a simple compliance checkbox and more as a strategic asset. By using the features of your new system, you can transform how you operate, making your financial processes a source of strength and insight. It’s about turning a regulatory requirement into a competitive advantage. Let's look at three key ways you can get the most value from your investment.
When your revenue data is accurate and up-to-date, you can stop guessing and start making strategic moves with confidence. Automation ensures you record money earned at the right time, following ASC 606 rules, which gives you a true picture of your company's financial health. Instead of waiting weeks for reports, you get real-time insights into which products are performing well and where your growth opportunities lie. This clarity allows you to pivot faster, invest smarter, and build business plans based on solid numbers, not assumptions. You can find more financial insights to guide your strategy on our blog.
Audits don't have to be a source of stress. With an automated system, you build compliance directly into your daily operations. Following ASC 606 consistently helps software companies produce clearer financial reports, create better plans for the future, and reduce overall risk. Your automation tool acts as a single source of truth, meticulously documenting every transaction according to the rules. This means when auditors come knocking, you have a clean, transparent, and easily verifiable trail ready to go. It strengthens trust with investors and stakeholders, showing that your financials are managed with precision and care. The right tool integrates seamlessly with your existing stack to ensure data consistency across the board.
The month-end close is a notorious pressure cooker for finance teams, often involving long hours spent on manual reconciliations. ASC 606 automation can completely change that dynamic. It speeds up the entire revenue recognition process, especially for businesses with a high volume of transactions, giving you a much clearer and faster view of your daily revenue. By eliminating tedious manual work and reducing the risk of human error, your team can close the books in a fraction of the time. This frees them up to focus on what really matters: analyzing the data and providing strategic advice to the business. If you're ready to end the month-end scramble, schedule a demo to see how automation can help.
When it comes to ASC 606, misinformation can send you down the wrong path. Getting your revenue recognition right starts with separating fact from fiction. Let’s clear up the most common myths so you can approach compliance with confidence.
Thinking of ASC 606 as a one-time project is a common pitfall. The reality is that compliance is a continuous process that must evolve with your business. Every time you introduce a new pricing tier, modify contract terms, or bundle services differently, your revenue recognition policies need to be re-evaluated. For example, a change in performance obligations can alter the timing of revenue recognition for all new contracts going forward. This isn't about setting it and forgetting it; it's about building a dynamic system that keeps your financials accurate as your company grows and adapts to market changes. Ongoing vigilance is essential for maintaining compliance and providing stakeholders with a true picture of your financial health.
It’s a satisfying thought—closing a deal and booking all the revenue instantly. Unfortunately, ASC 606 doesn't work that way, especially for software and SaaS businesses. The standard requires you to recognize revenue as you satisfy your performance obligations, which means as you deliver the service to the customer. For a one-year software subscription, this means recognizing 1/12th of the contract value each month. This approach provides a more accurate representation of your company's financial performance over time. It prevents revenue from being overstated in one period and understated in others, giving you a clearer, more stable view of your company's growth trajectory.
While the finance team is on the front lines of ASC 606, treating it as solely their responsibility is a mistake. The standard has a ripple effect across the entire organization. Your sales team's commission structures might need adjustments based on when revenue is recognized. Marketing's product bundles and promotions directly influence how performance obligations are identified and valued. To manage this complexity, your systems must communicate effectively. Seamless integrations between your CRM, ERP, and other platforms are crucial for creating a single source of truth, ensuring that data flows correctly and everyone is working from the same playbook. This alignment prevents silos and supports accurate, company-wide compliance.
The five-step framework of ASC 606 can seem deceptively simple on the surface. However, the real challenge lies in the application, particularly for software companies dealing with complex contracts, variable consideration, and bundled services. Determining the standalone selling price (SSP) for each performance obligation or accounting for contract modifications can be incredibly nuanced. Getting it wrong isn't just a minor bookkeeping error; it can lead to material misstatements in your financial reports, serious complications during an audit, and poor strategic decisions based on flawed data. True compliance requires a deep understanding of the standard or a robust system designed to handle these complexities automatically.
Many smaller businesses and startups assume ASC 606 is a "big company" problem, but the standard applies to nearly all entities with customer contracts, regardless of size. For a growing company, establishing proper revenue recognition practices early on is critical. It builds a solid financial foundation that supports scaling, instills investor confidence, and prepares you for future audits or a potential acquisition. Ignoring compliance can create significant technical debt that becomes much harder and more expensive to fix later. You can find more helpful articles on this and other financial topics on our blog to help you get started on the right foot.
Staying compliant with ASC 606 isn't just about catching up; it's about looking ahead. The world of financial technology is constantly changing, and the tools we use for revenue recognition are evolving right along with it. As your software company grows, your approach to compliance will need to mature, too. This means embracing new technologies, adapting to shifting standards, and building a company culture that prioritizes financial accuracy and agility. Let's look at what the future holds and how you can prepare your business to thrive.
Automation is already a game-changer, but artificial intelligence (AI) and machine learning are taking it a step further. The next wave of financial tools is moving from simply processing data to actively interpreting it. More platforms are using AI to offer better predictions and smarter pricing advice. Imagine your systems automatically adjusting prices in real-time based on market conditions or forecasting revenue with a much higher degree of accuracy. This isn't science fiction; it's the direction revenue management is heading. For software companies, this means more dynamic, responsive financial strategies that can adapt on the fly, giving you a serious competitive edge.
While ASC 606 is the current standard, the principles behind it—clarity, consistency, and transparency—are here to stay. At its core, ASC 606 is a framework that clarifies how companies should record the money they earn from customers. Following its five-step process helps software companies create clearer financial reports, plan more effectively for the future, and reduce compliance risks. As accounting rules continue to evolve, having a flexible and automated system in place is crucial. This allows you to adapt to any new requirements without having to overhaul your entire financial workflow from scratch each time a new guideline is introduced.
Compliance isn't a one-time project you can check off a list. It's an ongoing commitment. As your company introduces new products, enters new markets, or changes its sales methods, your systems and processes must keep up. This requires building a culture of continuous improvement where your team is always looking for ways to refine your financial operations. You don't have to do it alone, either. Sometimes, the best move is to get help from experts. An experienced partner can guide you through the complexities of compliance, freeing you up to focus on what you do best: running your business. If you're ready to see what a dedicated partner can do, you can schedule a demo to explore a tailored solution.
My company is still small. At what point do I really need to worry about automating ASC 606? It’s smart to think about this early, even before you feel like you’re "big enough." The complexity of ASC 606 isn’t about your company’s size, but about the nature of your contracts. If you bundle services, offer different subscription tiers, or have any kind of variable pricing, you’re already dealing with the core challenges. Establishing a solid, automated process now builds a scalable foundation, preventing a massive and costly cleanup project down the road. It’s much easier to start with good habits than to fix bad ones later.
Can't I just handle this with spreadsheets and my existing accounting software? While it might seem possible at first, relying on spreadsheets is a short-term fix that often creates long-term problems. Manual processes are prone to human error, incredibly time-consuming, and nearly impossible to scale as your business grows. They also make audits much more difficult because it's hard to create a clear, traceable record. A dedicated automation tool is designed to handle the specific nuances of ASC 606, like unbundling services and managing contract changes, ensuring your reporting is both accurate and defensible.
What's the biggest mistake companies make when trying to comply with ASC 606? The most common mistake is treating compliance as a one-time, finance-only project. ASC 606 isn't a box you can check and forget; it's an ongoing process that needs to adapt as your business evolves. It also impacts your entire organization, from how sales structures deals to how legal writes contracts. Ignoring these cross-departmental effects and failing to build a flexible, continuous compliance system can lead to inaccurate financials and poor strategic decisions.
How does ASC 606 automation actually help with audits? Automation transforms audit preparation from a stressful scramble into a straightforward process. Instead of manually digging through spreadsheets and contracts to justify your numbers, an automated system provides a clean, centralized, and auditable trail for every transaction. It documents how you identified performance obligations, calculated their value, and recognized revenue over time. This gives auditors the transparent, consistent data they need, which builds confidence and makes the entire experience much smoother.
Will implementing an automation tool mean I have to completely change how my sales team structures deals? Not necessarily. The goal isn't to restrict your sales team but to create alignment between sales and finance. An automation tool provides clarity on how different contract terms will impact revenue recognition. This empowers your sales team to structure deals that are not only attractive to customers but also financially sound for the business. It’s less about forcing change and more about giving everyone the visibility they need to work together more effectively.
Former Root, EVP of Finance/Data at multiple FinTech startups
Jason Kyle Berwanger: An accomplished two-time entrepreneur, polyglot in finance, data & tech with 15 years of expertise. Builder, practitioner, leader—pioneering multiple ERP implementations and data solutions. Catalyst behind a 6% gross margin improvement with a sub-90-day IPO at Root insurance, powered by his vision & platform. Having held virtually every role from accountant to finance systems to finance exec, he brings a rare and noteworthy perspective in rethinking the finance tooling landscape.
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