Why private companies should care about the new revenue guidance now
WHITE PAPER |
In our whitepaper, Why private companies should care about the new revenue guidance now, we advise private companies to start early in their process of implementing Topic 606, “Revenue from Contracts with Customers,” of the FASB’s Accounting Standards Codification (ASC). Our experience has shown that:
- Starting early can limit disruptions throughout the organization. If not properly managed in advance, the implementation process could be overwhelming.
- If done thoughtfully and thoroughly, implementation of the new standard can provide an opportunity to consider strategic operational issues such as improving efficiency, enhancing information systems and strengthening processes and controls.
- Financial metrics, such as EBITDA and balance sheet ratios, may change. This will impact negotiations with lenders and potential acquirers so should be addressed sooner rather than later.
- Understanding the impacts early enables companies to contemplate making changes to contract terms and pricing policies to achieve the desired revenue model under the new standard.
- Starting the implementation process early enables more time to engage and train resources throughout the organization so they are prepared to report under this new complex standard once it becomes effective.
Our whitepaper discusses the primary challenges and opportunities associated with implementation of ASC 606, and explains how a private company can be in a position to efficiently adopt the standard.