Business services: Preparing for revenue recognition
The process for recognizing revenue from service contracts is about to change for business services firms, with the new standard taking effect in 2018 for public business entities and in 2019 for all other organizations.
Planning is essential to adopting the coming framework, since the new standard is applied to all contracts with customers. With wide variation and complexity in service contracts, they will have to be evaluated one by one or by portfolio of similar contracts. The process can take significant time.
Our Revenue recognition resource guide for business services lists top topics related to revenue recognition for service contracts, including:
- Combination of contracts and contracts with multiple promises
- Contract modifications
- Variable payments
- Customer incentives
- Extended payment terms and noncash consideration
- Point in time or over time revenue recognition
- Commissions, set-up costs, and contract fulfillment costs
- Principal vs. agent transactions
- Nonrefundable upfront fees
- Impacts on the balance sheet and taxes
Download our Revenue recognition resource guide for business services to help your organization implement the new standard.