Managing contracts is already a painful process. When the new revenue recognition rules outlined in ASC 606 go into full effect, the process will become even harder.
Beginning in December 2018 all companies will need to report revenue from all contracts in a new way. The goal is to make revenue recognition simple and more standardized across industries. But to achieve that, companies must follow new rules and adopt different practices.
A survey conducted in mid-2017 revealed that 70% of the responding companies had not yet fully adapted to ASC 606 rules, and 14% hadn't even read over the new rules. As the final deadline looms, companies must get serious about adopting a whole new approach to contracts.
The Advantage of Artificial Intelligence
A major priority of the ASC 606 rules is to build greater transparency into the revenue recognition process. That can mean accountants will have to scour through reams of unstructured data in order to supply the mandatory facts and figures.
But addressing this new workload may not require an army of extra accountants. Smart technologies like artificial intelligence can analyze vast sets of unstructured data, pull out relevant insights, and can format them according to the ASC 606 rules.
Artificial intelligence can complete more work in less time. That means adapting to ASC 606 could actually be a way to improve the contracts and revenue recognition process overall. More gets done while requiring less input from the accountants already on staff.
The other benefit is that artificial intelligence is less likely to mistakes. A lot depends on having airtight contracts. Mistakes could jeopardize client relations and raise red flags with regulators. When smart technology is handling the work, however, the risk of errors and omission drops.
Adopting New Technology in Time for Compliance
Public companies are already subject to the new rules, but private companies have until the end of 2018. That means there is still time to prepare. But it also means the companies with the fewest accounting and IT resources are often the farthest behind.
Solutions like Sage Intacct's Contract Revenue Management software can help companies make the transition by automating day-to-day tasks and regulatory compliance, streamlining the order-to-cash process by integrating with Salesforce, and by delivering relevant insights to stakeholders. Mistakes made managing unwieldy spreadsheets can finally be avoided. And Sage Intacct's solution does this out of the box.If you're ready to put ASC 606 anxiety behind you permanently, contact AcctTwo.