Mastering revenue recognition

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Note from the editor

The five steps for recognizing revenue under Accounting Standards Codification (ASC) 606 are simple enough on their face, but reality is very different. Even something as straight-forward as determining performance obligations or allocating prices to performance milestones can be complicated by contract terms.

That's why it's crucial CFOs and other finance leaders work closely with their colleagues in legal, sales and other function areas. You want everyone on the same page when it comes to timing and other rev rec issues. 

The consequences of not getting it right are significant. On a finance level, it can mean the difference between meeting — or missing — quarterly targets, or complicating the marketing team's efforts to launch a sales initiative when it makes the most sense. On a compliance level, it can mean the difference between a clean review — by an auditor or the Securities and Exchange Commission — and one that lands a company in hot water. 

To help you take your rev rec processes to the next level — now that ASC 606 is in effect for both public and private companies — we've compiled a selection of stories from CFO Dive over the last year. Several of the pieces look at the standard from a compliance standpoint, others from a business or financial standpoint. We hope you find the selection useful. 

Robert Freedman Editor

Improper revenue recognition tops SEC fraud cases

Of the 10 most common types of fraud, the most frequent involve timing issues.

• Published Aug. 20, 2020

As fraud rises, CFOs must approach numbers skeptically

Executives might be committed to accuracy, but middle managers and others throughout the organization must be on board, too.

• Published Jan. 12, 2021

Former WageWorks CEO, CFO fined for improperly recognizing revenue

• Published Feb. 3, 2021

Managing a smooth transition to ASC 606 revenue recognition

Decisions made by legal, sales, and other teams can affect how you recognize money coming in and going out, so collaboration is key to staying on the right side of the 700 pages of guidelines.

• Published Nov. 25, 2019

AllCloud CFO: ASC 606 a path to recurring revenue model

Finance chief Jody Cire found a way to smooth volatile revenue recognition at a previous company by switching to a ratable accounting method.

• Published June 20, 2020

3 tips for CFOs looking to migrate to a subscription pricing model

Tip one: Resist moving revenue recognition outside of your ERP, otherwise you decrease visibility into the success of your subscription model and create reporting, tracking and compliance problems.

• Published Aug. 19, 2020

Mastering revenue recognition in 2021

Now that ASC 606 is in effect for both public and private companies, it's crucial that CFOs and other finance leaders work with colleagues in legal, sales and other function areas to get it right. To help you take your rev rec processes to the next level, we've compiled a selection of stories from CFO Dive over the last year.

included in this trendline
  • Managing a smooth transition to ASC 606 revenue recognition
  • Former WageWorks CEO, CFO fined for improperly recognizing revenue
  • 3 tips for CFOs looking to migrate to a subscription pricing model
Our Trendlines go deep on the biggest trends. These special reports, produced by our team of award-winning journalists, help business leaders understand how their industries are changing.
Davide Savenije Editor-in-Chief at Industry Dive.