Rev Rec Consulting Updates SaaS Implementation Plan

Client Profile

Industry: Technology Annual Revenue: >$100 million Geographic Footprint: National Ownership Structure: Private Equity Owned

Issue

A software as a service (SaaS) company needed to understand how the new revenue
recognition accounting standard would affect its operations in order to address questions
from its board and establish a meaningful operating budget for the next financial year.
The requests came early in the accounting standard’s roll out, so the company had little
interpretative guidance to help with its evaluation.

Solution

Our team reviewed revenue schedules and over 100 contracts for the SaaS company. We
worked closely with sales and operations teams to understand the nature of the promises in
those contracts and the standalone selling prices of the contracts’ performance obligations.
The knowledge we had of the SaaS industry and the revenue recognition standard helped
identify a new performance obligation: a material renewal right within the company’s
contracts. We also provided input on the material right’s standalone selling price and revenue
recognition pattern.

Outcome

With our help, the company caught potential implementation issues before its Jan. 1, 2019,
revenue recognition adoption date, put forth a meaningful 2019 budget and addressed its
board’s questions about the impact of the new standard. We also provided documentation
that satisfied the revenue recognition adoption information requests made by the SaaS
company’s Big 4 audit firm.

Published on April 25, 2019