Here’s one reason why QuickBooks can’t handle the new revenue recognition rules……
The new revenue recognition rule, ASC 606 takes effect for public companies in 2018 and in 2019 for private companies. Here’s how QuickBooks will “handle” the new revenue recognition rules: let’s say a private company writes up a contract in 2018 and it’s a multi-year, extending into 2019 and beyond. Starting in 2019 this private company will need to apply ASC 606 for revenue recognition. In the QuickBooks environment, that means tracking revenue recognition off line via multiple Excel spreadsheets requiring lots of manual tracking and excessive JE’s to recognize revenue under 606. Any contracts where refunds, credits, rebates, penalties, incentives, etc. are utilized have to be treated as 606 compliant based on 2018 (public) or 2019 (private) requirements.
Example: Private company builds a new multi-year contract, starts in 2018, extends into 2019 with a refund of $1,000 on July 1, 2019 – in QuickBooks there are no contracts or automated revenue recognition schedules/templates to build or auto recognize this July 1, 2019 revenue……so it has to be done on a manual Excel spreadsheet and someone has to remember all the customer dates when to create yet another manual JE to recognize this revenue…..this is highly inefficient and not the best way forward.
Sage Intacct automatically handles ASC 606 with its Contracts and Revenue Management modules. Key advantage: Sage Intacct will allow creating two sets of books – one for the current standard and one for the ASC 606 standard. This allows users to capture reporting information under both the current revenue recognition standard and the ASC 606 standard, allowing users to present information in prior periods before and after your company implements the ACS 606 standard. Sage Intacct will also automatically determine scheduled posting dates in revenue schedules according to the recognition method in the associated revenue template.
For more information on how Sage Intacct can help your company with the new revenue recognition rule please reach out to Barry Coyne.