2. Introduction
Don Ramsay
A CPA accountant with 26 years of experience including 5 years as a Dynamics GP
consultant. Experienced in multiple business areas including Government,
logistics, software, retail and wholesale markets.
Career History:
Solutions Consultant 2015 – Present
Dynamics GP Consultant 2009 – 2015
Senior Finance & IT Roles 1989 – 2009
Education:
• CPA designation obtained in 1994
• Novell Network Administrator (1993)
• MCSE (Microsoft Certified System Engineer)
• MCBMSP (Microsoft Certified Business Management
Solutions Professional)
4. Business Goals - ARCB
Increase ROI – Do more with less
tools/people
Make better decisions
Identify and eliminate waste /
inefficiency
Reduce quote to cash time
Ensure GAAP compliance
Faster access to the right data at the
right time
Fewer repetitive tasks
Reduce data entry errors
5. Business Goals - ARED
• Comply with revenue recognition standards
• Accurate and prompt information
• Create accurate forecasts / reports
• Complete control over when recognition
entries are posted
• Satisfy audit requirements with reduced
effort
• Minimize reconciliation at month-end
• Eliminate effort required to create
recognition schedules
6. Challenges
• Complex billing and revenue recognition schedules
• Multiple pricing models
• Revenue / expense recognition schedules in Excel
• Evolving accounting standards
• Multiple non-integrated systems for quote to cash
7. Capabilities
• Produce real time sales analysis
• Forecast future revenue streams
• Eliminate manual rekeying of data and redundant
processes
• Produce invoices / financial reports in a timely manner
• Integrate contract management and billing system with
ERP
• Create evergreen renewal schedules
• Guidance for GAAP compliance
• Modify a schedule at any time
• Record revenue in the period in which it’s earned
• Manage deferral process within existing accounting system
8. Benefits
• Reduce quote to cash cycle time
• Reduced cost of maintaining multiple systems
• Reduced data entry expense
• No revenue “leakage” due to missed renewals
• Minimize audit expenses
• Avoid non-compliance penalties
• Goodwill & other intangibles
10. • Create a deferral line for each deferred item
• Reconcile it each month, looking for changes, updates, adding new lines, deleting retired lines
• Create a manual JE each month
• Manage events/milestones manually
• Now imagine you have 10’s of thousands of contracts, with 5 to 10 lines each!
• Add ASC 606 complexity on top of that!
Deferrals in Excel
Month 1 Month 2 Month 3 Month 4 …
Setup Fee $5,00024 mos. 208.33 208.33 208.33 208.33 …
Service Contract $12,00012 mos. 1,000.00 1,000.00 1,000.00 1,000.00 …
Pro Services $3,000Event ? ? ? ?
Month 1 - Recognize revenue
Deferred Revenue 1,208.33
Revenue 1,208.33
11. Initial Contract:
Item Ext. Price Type Contract Value SSP Contract SSP
Reallocated
Contract
Revenue Period Revenue
HW 15,000.00 One time 15,000.00 17,000.00 17,000.00 15,095.44 15,095.44
Setup Fee 5,000.00 One time 5,000.00 5,000.00 5,000.00 4,439.83 4,439.83
SAAS SW 7,000.00 Monthly 168,000.00 8,000.00 192,000.00 170,489.63 7,103.73
SW Annual Maint. 12,000.00 Def. 12 mo 24,000.00 12,000.00 24,000.00 21,311.20 10,655.60
Prof Services 3,000.00 Def event based 3,000.00 3,000.00 3,000.00 2,663.90 2,663.90
Discount - 1,000.00 - 1,000.00 - - -
41,000.00 214,000.00 45,000.00 241,000.00 214,000.00 39,958.50
Remember the formula: (Item SSP / Sum of SSPs) * Contract Value
Example: SAAS SW: (192,000 / 241,000) * 214,000 = 170,489.63
Jan 2016 Invoice:
Item Ext Price Revenue Distribution
HW 15,000.00 15,095.44 AR 41,000.00
Setup Fee 5,000.00 4,439.83 Sales HW 15,095.44
SAAS SW 7,000.00 7,103.73 Sales Setup 4,439.83
SW Annual Maint. 12,000.00 10,655.60 Sales SW 7,103.73
Prof Services 3,000.00 2,663.90 Deferred Rev Maint 10,655.60
Discount - 1,000.00 - Sales Prof Serv 2,663.90
41,000.00 39,958.50 Contr.Rev.Clearing 1,041.50
41,000.00 41,000.00
ASC 606 Example – Using Excel
12. A recent report from the EU found
over 50% of all critical spreadsheets
in large organizations contained
“material defects”!
http://www.eusprig.org/basic-research.htm - European Spreadsheet Risks Interest Group
13. Thank you! Any Questions?
If you have any questions, please contact your
Binary Stream Account Manager or call 604-522-6300
sales@binarystream.com