Part 5 of a 6-part series
When considering the introduction of the revenue recognition guidelines, begin as soon as possible. Don’t wait until the “mandatory” date to address the new guidelines; it will be too late. Here are the typical stages that we see organizations going through as they prepare for the new guidelines:
Stage 1: Study the impact and determine strategy
- Define the procedures for assigning value to a contract’s performance objectives
- Realistically analyze your accounting subsystems
- Can they easily be tweaked to accommodate the new revenue recognition guidelines?
- Will major systems need heavy modification or replacement? If so, what are the options?
- Do you have the resources to retrofit on-premises systems? Will it require outsourcing?
- Would a cloud implementation provide a quicker and more financially prudent solution?
Stage 2: Identify the reporting information required by external and internal stakeholders
- Determine the impact that the new guidance will have on existing contracts
- Consolidate the historic impact under new guidance
- Prepare reports to illustrate and differentiate revenue under new and prior revenue reconciliation methods
Stage 3: Implement the required accounting subsystems changes
- Configure accounting rules and set up ledgers
- Modify or install the accounting subsystems
- Process and report using dual accounting
Stage 4: Transform the business
- Communicate the impact of the changes to the business
- Train the organization to apply the new revenue recognition guidelines
- Report using new revenue recognition guidelines
But how are you going to manage these stages? How do you begin? Part 6 of this series, “How will Oracle’s experience help?” provides some advice.
New Revenue Recognition Guidelines Series:
Part One: Like It Or Not, They're On the Way
Part Two: What Are the Guidelines and Examples?
Part Three: Who is Affected?
Part Four: What Challenges Do the New Rules Present?