ASC 606 Implementation: 5 Lessons Learned from Real Companies
Note: ASC 606 (IFRS 15) is in effect for public companies (as of December 15, 2017). Private companies must complete their ASC 606 implementation and be compliant by December 15, 2018.
Under the new revenue recognition standards, organizations are struggling to understand the impacts of commission expenses. As a result, they’ve underestimated the amount of time needed for ASC 606 implementation. At Xactly’s recent CompCloud on the Road event in Austin, we held a customer roundtable focused on commission expense accounting (CEA) under the new ASC 606 (IFRS 15) standard.
We gathered four Xactly customers in various stages of implementation—Monotype, Sitecore, Empirix, and Barracuda Networks—to share their preparation and implementation processes, challenges they’ve faced, and what they’ve learned about managing commissions under ASC 606.
Five major lessons emerged from the discussion of their experiences while implementing ASC 606.
Watch the webinar, "Meet Commission Accounting Requirements Under ASC 606 (IFRS 15)," to see a demo of how Xactly CEA can help with ASC 606 implementation and compliance.
5 Things Our Customers Have Learned in Their ASC 606 Implementation
Here are five things our customers have learned during their ASC 606 implementations.
1. Start preparing for ASC 606 now.
Many companies have found that compliance is more complex (because of multiple compensation plans, complex contracts, the amount of data detail required, etc.), and thus, implementation takes more time than they expected. It’s important for organizations to start preparing as early as possible.
2. We’re all in the same boat.
Most companies are facing the same questions around ASC 606 implementation (e.g., determining customer life, level of data detail needed, etc.). This has put organizations in a holding pattern, in which they struggle to determine the right implementation approach.
3. Spreadsheets don’t work. You need technology.
The more complex your sales compensation plans and product/service offerings are, the more you need a comprehensive tool to manage implementation. Technology reduces the chance of errors, speeds up implementation time, and provides a “single source of data truth” that spreadsheets aren’t able to.
4. Strengthen internal relationships and align company priorities
Organizations need to work together to account for commissions under ASC 606 successfully. Companies must align their compensation administration, accounting, and auditing teams so they can work together and use sales data effectively.
5. Invest in ASC 606 expertise.
ASC 606 (IFRS 15) is a big change for companies, and there’s a certain level of knowledge needed for successful implementation. It’s important for an organization to invest in becoming an ASC 606 expert, bring in outside expertise, and get internal and external auditors on the same page for implementation.
Watch the webinar, "The Risk and Reward of ASC 606," to discover the impact of ASC 606 to incentive planning and how the tactical need for better data can give companies a strategic advantage.
How Xactly Helps with Sales Planning and ASC 606 Implementation
Xactly helps companies organize their data in one comprehensive sales performance management (SPM) tool. This allows for more integrated sales planning—from sales capacity planning to territory design, quota allocation, and compensation management.
Paired with Xactly CEA, organizations can transfer data seamlessly to ensure accuracy and easier adherence to ASC 606 (IFRS 15). Interactive accounting dashboards provide detailed data for deeper visibility and simplify the creation of adjusting entries.
Learn more about the benefits of a data-driven, end-to-end SPM solution in our white paper, “Driving ROI: The Business Case for a Comprehensive Sales Performance Management (SPM) Solution.”
Driving ROI: The Business Case for a Comprehensive Sales Performance Management (SPM) Solution
Hobson & Company, a research firm focused on ROI and Total Cost of Ownership (TCO) studies, worked with Xactly to explore these challenges. The white paper highlights examples of operational and business benefits that can be realized with Xactly's comprehensive sales performance management solution from Xactly across sales planning, execution and optimization.