ASC 606 stands for Accounting Standards Codification (ASC) as Topic 606: Revenue from Contracts with Customers. ASC 606 is a new revenue recognition standard that has been put into place to improve the revenue recognition portion of financial statements and increase the consistency of financial reporting across industries. Revenue recognition is a particularly important accounting principle for subscription-based businesses. It determines the specific conditions under which income becomes realized as revenue. Simply put, under ASC 606 revenue must be recognized when and as its value is received by the customer.
Existing revenue recognition guidelines are inconsistent across industries and between US GAAP and IFRS, and they also fail to address certain types of arrangements. This new standard is aimed at reducing or eliminating those inconsistencies which will improve comparability and eliminate gaps.
The new standards will also include improved disclosure requirements and provide a more robust framework for addressing revenue issues.
ASC 606 revenue recognition standards are applicable to companies in the US and are set to take effect for public companies on Jan 1, 2018 and for private companies on Jan 1, 2019. Adopting ASC 606 mean SaaS, IoT, or any other subscription-based businesses recognize their revenue in a way that is compliant, which requires the ability to track their earned and deferred revenue over the entire period of the subscription. For example, when subscribers make mid-term changes, it will be necessary to recognize revenue appropriately before the change and have any new revenue recognition requirements take hold after the change takes place.
Fusebill is an automated billing and management platform that allows businesses to maximize revenue and scale their operations. Fusebill supports the revenue recognition requirements laid out in ASC 606 for recurring revenue and can help any subscription business become compliant.
Fusebill allows all the pieces of a subscription agreement to be broken into separate parts that can each receive a value and a revenue recognition schedule. This schedule determines how and when revenue gets recognized, so staying compliant with ASC 606 is automatic.
One of the biggest obstacles to becoming ASC 606 compliant is handling mid-term subscription changes. Making changes manually to a subscription is an extremely complex and time-consuming process. With each change, settings need to be switched to initiate the replacement of one plan with another. There are also accounting adjustments that need to happen - such as proration of charges on the new subscription, cancellation of or partial reversal of charges on the old subscription, ledger movements for deferred and earned revenue and tracking MRR contraction and expansion.
Fusebill's upgrade/downgrade capability (one of the best in the industry) automates the entire process and gives you the power and flexibility to satisfy customer needs. Because Fusebill automatically takes care of the back-end, customers can adjust their own subscriptions through Fusebill's self-service portal. Research has shown that the average customer will make 4 mid-term plan changes during the course of their subscription. This means you need your revenue recognition calculations to sync seamlessly and automatically with each adjustment.
The ability to recognize your revenue automatically and accurately allows you to remain compliant with the new ASC 606 standards and have access to an accurate real-time revenue picture. Fusebill's revenue recognition dashboard display shows deferred and earned amounts at any given time.
Fusebill's robust platform has a low entry price because smaller organizations need to get started on the right foot without having to overspend for capabilities they don't use right away. This means that the Fusebill platform scales with the needs of your organization over time. Smaller businesses need a competitive advantage, if not more than larger businesses do, and that is why all pricing packages include a full feature set of capabilities.
Fusebill is the industry leader in simplifying revenue recognition and its agile platform automates and manages all your subscription billing activities. It is easy to deploy, easy to use and priced better than the competition.
Let Fusebill take ASC 606 compliance changes off your to-do list.
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Uberflip’s customer invoicing requirements are high volume and steadily growing. With over 1600 subscription customers and multiple subscription packages for them to choose from, their subscription management and billing requirements were becoming unmanageable with their manual process.
ClearPathGPS’ customer billing requirements are highly customized and high volume. They are a no-contract provider which means they need to prorate subscriptions to the day and there can be hundreds of plan adjustments daily. Not only is this a cumbersome process but it is a complex one that required a flexible solution.
instream has reduced their registration and billing process time by 80%. See how Fusebill saves them time and money allowing them to focus on other strategic areas of the business.
NonProfit Technologies (NPT) had experienced tremendous growth at an early stage, scaling their customer base by 500% within the first 2 years of business. Fusebill helped to fuel that growth by automating their billing, allowing NPT to focus on other important areas of their business.