The new revenue recognition standard goes into effect in 2018 for public business entities and in 2019 for all other organizations, and it's critical for professional service firms to begin planning. The move to a new process for how you recognize revenue won't be the same old, same old.
The framework used by the new standard applies to all contracts with customers. With such variation in professional service contracts, you'll need to analyze agreements one by one or by portfolio of similar contracts. As a result, the amount of work involved for professional service firms to switch to the new framework and its five-step revenue recognition process can take significant time.
Our revenue recognition resource guide for professional services includes key topics on revenue recognition for the professional service industry, including:
- Combining contracts and contracts with multiple promises
- Contract modifications and contract fulfillment costs
- Customer furnished materials and customer incentives
- Variable payments
- Extended payment terms, milestone payments, and noncash consideration
- Point in time vs. over time revenue recognition
- Set-up costs
- Loss contracts
- Principal vs. agent transactions
- Nonrefundable upfront fees
- Impacts on balance sheet and taxes
Download our Revenue recognition resource guide for professional services guide to help your organization implement the new standard.