New revenue recognition standards are fast approaching and companies everywhere need to begin shifting towards these new regulations now. This is a complex process that affects multiple levels of your organization and early preparation is the key. In order to be ready, you’ll need to analyze your organization thoroughly and then enact policies that put you on a steady path to compliance. The full extent of policy changes needed to get your firm into full compliance may seem daunting so we recommend you begin now and address the necessary issues one at a time. How will you keep track of everything that needs to happen? What are the practical changes your business can begin making immediately and what will the effects on your everyday processes look like? Practically speaking – how can you begin to move towards new revenue recognition standard compliance? We explore these questions below with a company example that illustrates how it’s done.


We recently worked with the VP of Finance at a Saas company, helping to successfully deploy NetSuite ERP to manage their accounting data. In particular the new software was aimed at giving more visibility into the relationship between their costs and revenues. This kind of visibility is exactly what the new revenue recognition standards are all about. What you may find surprising is that our recommended NetSuite deployment was consistent and up-to-date with the 2014 revenue recognition standards and thus not yet fully compliant with the forthcoming 2017 requirements. We wanted to help this client understand that the shift towards a new revenue recognition reporting standard can and should be a stepwise process. The new software rollout represents an important move in the right direction of the new regulations and allows the company’s financial reporting to begin accumulating the necessary two levels of reporting history that the 2017 regulations call for. The VP of Finance was convinced to drive the change incrementally for a few key reasons:

Organizational stability: Making incremental changes helps employee adapt to new protocols over time, without sacrificing productivity. This is a top concern for any transition in an organization, and making small changes over time makes it easier to educate employees on new standards for proper conduct and notations. At the same a complex transition is best organized and approached by a breakdown into more manageable goals and deadlines.

Creating a Sense of Urgency: Because these new standards and practices will have a ripple effect across the organization, the VP needed to ensure that the organization was strategically aligned with the necessary change. This means department-specific explanations and detailed plans for the future. Incremental change gives employees an appropriate amount of time to learn about and accept the coming shift so that they can support the transition in any way possible.

Impact modeling: By shifting practices step-by-step the VP was more easily able to see the downstream effect of changes on other company areas before they had the opportunity to become major roadblocks. Proceeding with caution can in effect bring complex issues to the surface as or before they happen in order to get them resolved quickly.

Impact modeling is the most daunting aspect of a major change like this and one that should be considered thoroughly. This is where a cross-functional ERP software like NetSuite can really shine by showcasing how changes in one department link to and affect changes in another. The new revenue recognition standards are about revising your protocols for accounting but they have implications to every other branch of your organization. Changes to how revenue is recognized can affect your sales team quotas and commission structures – it may even affect your day-to-day operational procedures. And how will all this affect the structure of your contracts coming through the legal group? Impact modeling can help address all this.

The most important point is that to begin making these changes is to take stock of your business and to reassess how the pieces fit together – ultimately in service of making your organization better. If you’re still not convinced that your company needs to make a change now – check out our top 15 benefits of upgrading your business software solutions and moving into the cloud.

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