Attendees were divided into 3 breakout rooms led by the hosts above for 10 minutes to discover key challenges facing the community.
Following breakout sessions attendees rejoined the larger audience to discuss topics with feedback from the community.
Topic 2
Initiatives and Pain Points Discussed
Discussion around straight line vs up front revenue recognition with a more nuanced conversation surrounding multi-tenant vs single tenant platform.
Discussion around facts and circumstances that promote hybrid revenue recognition.
Process improvements and tools for quote to cash, with a focus on CLM and CPQ positives and drawbacks.
Challenges with operationalizing SKU’s in deal desk.
Conversation around SaaS with a usage based model and the metrics companies present to their customers in billing to align with revenue recognition, e.g. ACV vs ARR.
Minimum guarantee true ups.
Challenges with reviewing and onboarding M&A activity presented in a foreign languages.
Data cleanliness for SSP analysis and data flowing from system to system.
Attendees were divided into 3 breakout rooms led by the hosts above for 10 minutes to discover key challenges facing the community.
Following breakout sessions attendees rejoined the larger audience to discuss topics with feedback from the community.
Topic 2
Initiatives and Pain Points Discussed
Determining SSP with a usage based pricing model and varying discounts.
Discussion around circumstances where it’s practical to use the residual method to calculate SSP.
Discussion around recognizing revenue for customers with repeat renewal history but no formal signed renewal contract. Specifically which additional triggers can be used to support revenue recognition such as verbal or email.
Discussion on distinguishing and separating performance obligations.
Defining elements of a contract such as customer option vs variable consideration.
Reviewing revenue recognition method for taxable income vs financial reporting with potential benefit of having separate recognition methods to defer tax payments into future years.
Attendees were divided into 3 breakout rooms led by the hosts above for 10 minutes to discover key challenges facing the community.
Following breakout sessions attendees rejoined the larger audience to discuss topics with feedback from the community.
Topic 2
Initiatives and Pain Points Discussed
Discussion of characteristics which qualify a product or service as being distinct in a bundle, including the need for customers to derive independent benefit.
Revenue recognition treatment on changing prices and structuring, specifically as it relates to bundling and unbundling.
Conversation around creation of policy memos for SSP allocation and keeping memos at a less granular level for audit purposes.
Differences in allocation of revenue and expenses between accounting and FP&A.
Challenges associated with transitioning from On-premises to Cloud services.
Conversation around contractual options for customers to transition to SaaS with the potential need to carve out a material right. Alternatively leveraging the return reserve approach to estimate length of time customers will continue with On-premise services.
Setting up SSP for the first time in a startup environment.
RevRec Forum: October 25th, 2022
Topic
Community Brainstorming: Top Initiatives or Pain Points Heading into 2023
Attendees were divided into 4 breakout rooms led by the hosts above for 10 minutes to brainstorm on key initiatives or pain points their teams are facing entering 2023.
Following breakout sessions attendees rejoined the larger audience to discuss topics with feedback from the community.
Part 2
Initiatives and Pain Points Discussed
Performance obligations in relation to bundling of services, more specifically when SSP’s aren’t available as services provided are no longer sold in an “unbundled” offering.
Accounting treatment for contracts with multiple PO’s that span multiple years with presumptive services that will be purchased in order to fulfill the expected obligations of the contract.
Data flow best practices between ERP and connecting softwares to help automate ARR and reporting.
Establishing processes to ensure accounting is involved early when new product offerings are available and best practices to automate these service offerings in accounting systems.
Discussion on best practice to help alleviate the burden associated with a first year audit.
Deep dive on participant specific variable consideration use cases.
As invoiced practical expedient.
Estimating difficulties and recommendations around seasonality, concessions, discounting, etc.
Part 2
Participant Specific Examples
Acquisition of smaller companies and steps taken to move customers from variable to fixed pricing to alleviate estimation needs.
Using constraint for estimation with a historical business practice of granting concessions for overages incurred.
Reducing estimation on contracts with usage minimums by directingthe sales team to have a monthly or quarterly commitment that resets.
Part 3
Performance Obligations
Allocating discounts to multiple performance obligations.
Variable consideration allocation exemption.
Part 4
Leveraging Contract Value as Standalone Selling Price (SSP)
Completing an analysis to demonstrate the immaterial difference between contract value and SSP based on historical data.
Examples of when this approach is most leveraged including new products, new customers or other areas where historical data isn’t representative of the contract.
RevRec Forum: July 21, 2022
Topic
Challenges for ASC 606 Post Implementation A 3 Year Outlook.
Setting a revenue threshold policy for potential customer concession requests.
Best practices for communication with sales operations to proactively vet any concessions in advance of signature.
Creating robust analytics as an integral part of close procedures.
Part 2
System Integrations
Difficulties with extracting data from legacy systems that don’t have proper integrations.
Importance of implementing modules, e.g. billing and revenue, that have scalability.
Part 3
Standalone Selling Price (SSP)
Best platforms for performing SSP analysis.
Scoping and setting material thresholds for SSP analysis.
Potential to create a Non-GAAP memo for SSP analysis.
Part 4
ASU No. 2021-08, Business Combinations(Topic 805)
Challenges with early adoption and the requirement to perform a new 606 analysis.
Benefits of deferred revenue typically being inherited at full amount on companies balance sheet vs prior method which typically required a reduction to deferred revenue and subsequent true ups.
Creating a scoping process based on the purchasing company's materiality.
RevRec Forum: June 21, 2022
Topic
Optimize for the next phase in Revenue Recognition.
Discussion on credit rebills and the ability of various revenue recognition software’s ability to meet customers specific use case needs.
Part 2
Revenue Recognition Controls
Discussion focused on difficulties of smaller companies in early stage (Series A and Series B) developing proper revenue recognition controls and systems early on that can be leveraged as the company scales and the importance of thinking through future growth.
Part 3
Stand-alone Selling Price (SSP)
Discussion surrounding proper treatment of SSP.
Discussion focused on best practices for documentation of assumptions made to establish SSP that are supportable under audit.
Part 4
Cost Capitalization of obtaining a contract
Discussion on proper treatment of capitalizing cost of obtaining a contract. Specifically as it relates to using estimates to capitalize employee labor and benefits.
Part 5
Reporting
Discussion on disclosure requirements for Remaining Performance Obligations (RPO).
