Revenue Recognition – An Increasingly Hot Topic

A hot topic around water coolers in the accounting department these days is revenue recognition.  We hear this issue coming up in many different vertical markets now, but it seems that the software & high technology industries have a particularly significant challenge in this area.  Consider a software company who, not only sells products but usually professional services as well.  Then take the sheer volume of deals that some firms do, add incentive programs they may provide and multi-year contracts, and properly recognizing revenue becomes a significant challenge to the accounting team.

What’s ironic is that when revenue recognition is done properly, you never hear about it.  When companies have tools in place and a procedure in which to handle the process, it’s not a big deal.  Where it becomes a very big deal is when companies do not have the proper technology, process or staff in place and aren’t managing it properly.  The ramifications can be severe, ranging from sanctions and fines levied by the court, to convictions and possible jail time in severe cases.

We have been asked by our clients to do a few different things to help them remedy this issue.  Not only do most want a tool or tools put in place that will properly help manage these tasks, but they also ask us to help them streamline and simplify the workflow surrounding these processes and most would like as much of the process as possible to be automated by those tools.

If you or your company needs help in this area, or if you’d like to know more, you can contact me at james.solomon@avankia.com.   If you’d like to read more on this topic, let me know and I will provide that to you as well.  http://www.avankia.com/netsuite_consulting

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