Part 1
ASC 606 and IFRS 15 bring a set of structured guidelines for recognizing revenue. For a SaaS or subscription business, revenue recognition can be complex, mainly because of the service-oriented nature of the product. If you report earnings to investors or other business stakeholders, they’ll want to see this.
The new ASC 606 standards simplify and clarify a lot of accounting principles when it comes to SaaS. The goal of this standard is to smooth over how contracted revenue is recognized across industries and around the world. Both fall under US Generally Accepted Accounting Principles (GAAP).
ASC 606 applies to any situation where there is a contract for goods and services. If you’re a SaaS business, this definitely applies to you. The deadline for reporting is December 15th 2017. From January 1st 2019, you will need to be reporting in this way. You probably want to implement this right now if you haven’t already. Investors and VCs are already looking for ASC 606-compliant metrics.
ASC606_1