Revenue Recognition Solutions for Technology Companies

Visit Website View Our Posts

With high-tech and on-line businesses continuing to deliver more products and services with greater flexibility, the complexity of recognizing companies’ revenues can impact the profitability and credibility of an organization as well as leaving it exposed to serious regulatory  noncompliance.

Tensoft’s Revenue Cycle Management (RCM) solution enables organizations to deal with today’s revenue recognition complexity while increasing profitability, customer satisfaction and investor confidence. Announced this month in a press release, RSM McGladrey has partnered with Tensoft to deliver these solutions to Technology Business.

The partnership is designed to address the needs of technology companies, where regulatory compliance issues present a significant challenge, and complex revenue, billing and contract management needs are ubiquitous. Software publishers, SaaS and hosting providers, game publishers selling through retailers, on-line content subscription providers, and OEMs with embedded software are just a few examples of these types of companies.

“At RSM McGladrey, we understand that technology companies face some of the most stringent regulatory requirements of any industry today, and often grow – and change - so quickly that it can be challenging to set up adequate business processes to address these,” said Stan Mork, managing director – technology services for RSM McGladrey. “By partnering with Tensoft, RSM McGladrey can deliver a scalable solution which meets the specific revenue, billing and contract management needs of these businesses, and can then provide the value-added consulting services that will provide significant strategic advantage.”

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board have issued a proposed Accounting Standards Update, Revenue Recognition (Topic 605):  Revenue from Contracts with Customers.  If adopted, the proposal would create a single revenue recognition standard for U.S. generally accepted accounting principles and International Financial Reporting Standards that would be applied across various industries and capital markets. The core principle of the draft standard is that an entity should recognize revenue from contracts with customers when it transfers goods or services to the customer in the amount of consideration the entity receives, or expects to receive, from the customer.  The approach required to apply this guidance would be as follows:

  • Identify the contract(s) with the customer;
  • Identify the separate performance obligations in the contract;
  • Determine the transaction price;
  • Allocate the transaction price to performance obligations; and
  • Recognize revenue when performance obligations are satisfied.

This required approach, together with several other significant items included in the draft standard, are described in a document published by RSM McGladrey & Pullen’s National Accounting Standards Group.  Our summary, FASB Issues Exposure Draft on Revenue Recognition, is also available on the RSM McGladrey & Pullen Web site

Tensoft RCM integrates with Microsoft Dynamics GP through the general ledgers, accounts receivables, and sales order modules.

By: Kathy Davidson, RSM McGladrey - Revenue Recognition Solutions for Technology Companies

1 thought on “Revenue Recognition Solutions for Technology Companies”

  1. Since the original post above, Tensoft Revenue Cycle Management (RCM) has earned “Certified for Microsoft Dynamics" (CfMD) accreditation, the highest distinction available for Microsoft partner developed solutions. Through its dedicated compliance module, Tensoft RCM provides robust compliance support for managing FASB regulations including VSOE and EITF 08-01 in addition to the core contract management, complex billings and revenue recognition capabilities.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Show Buttons
Hide Buttons