- Kimble Applications Prepared to Support Professional Services Organizations as New Accounting Standards on Revenue Recognition Take Effect
Kimble Applications Prepared to Support Professional Services Organizations as New Accounting Standards on Revenue Recognition Take Effect
August 23, 2017 – Boston, MA – With less than five months to go until the new accounting standards on revenue recognition known as ASC 606/IFRS 15 come into force, Kimble Applications, a global leader in professional services automation (PSA), is uniquely positioned to provide strong support for the new standards. Kimble welcomes these changes with open arms as its PSA software’s longstanding approach and best practice are in exact alignment with the new standards. (Learn more about how to prepare in our new webinar)
The new accounting standards’ five-step revenue recognition model begins with identifying a customer contract and then goes on to identify and record the performance obligations which have to be met to earn the agreed remuneration of the contract. An entity must recognize revenue to detail the obligation of promised goods or services to customers in an amount that reflects the consideration to which the entity expected to be entitled for those goods or services. If an obligation is incomplete, the revenue should not be recognized.
Kimble’s software has always supported the principles embodied in IFRS 15 at no extra charge. Rather than being an add-on, these capabilities are built into Kimble’s core software.
“Since its creation, our software has supported the objective of transparency and consistency by embedding a flexible rules-based approach to the calculation of revenue forecasts and actuals,” said Mark Robinson, co-founder of Kimble Applications. “We are confident a single revenue recognition model will promote greater consistency across all industries and capital markets. Fortunately for our customers, they will be well equipped for this change given our software has supported the principles laid out in these standards for years.”
Kimble’s software has a systematic, transparent and auditable approach. It supports a variety of standard template rules for an array of commercial structures, such as fixed price, time and materials and periodic. These can be combined in a number of ways, but they all treat revenue recognition appropriately.
“We brought in Kimble PSA because we wanted a system that really understands the revenue recognition and forecasting requirements of a consulting organization,” said Chris Laslett, managing director of Chaucer Consultants. “The architecture of the software uses period management capabilities to encourage and ease the process of timely period closure to keep the revenue picture up to date, which we find to be a very beneficial feature.”
Key features of Kimble’s PSA software that will prepare businesses for the revenue recognition changes include:
- Real-time calculations allow for revenue forecasts to be projected and updated in real-time as they unfold based on predictions.
- Tamperproof algorithms eliminate the manual finessing of individual revenue figures giving a more accurate, automated view of revenue streams, with an underlying audit trail.
- Multiple revenue recognition models to facilitate accounting for complex revenue contracts, ensuring consistency between forecasting and actualization.
- Forecasting revenue for services associated with the pipeline of as-yet unsold work, giving a fuller view of project statuses as they change and are delivered, which is crucial to operating within the new standard.
“The new revenue reporting standard comes into effect in just a few months, and yet many companies do not have a complete understanding of how they need to adjust their processes,” said Julie Farr, senior finance consultant at Isosceles Finance Limited. “There will be confusion and some headaches with this change that may result in a re-evaluation of the software which firms are using to run their businesses. Kimble’s software has been recognizing revenue in the way the new standard outlines since it launched in 2010 and therefore its customers are already well prepared for the impending change of standard in January.” For more information on Kimble’s revenue recognition capabilities, email us.
Find out more about how to prepare for ASC 606 and IFRS 15 by attending our new webinar, “Get Ready For The New Rev Rec Standards,” featuring Rev Rec expert Julie Farr of Isosceles Finance.