Countdown to Compliance: Are you ready for ASC 606 / IFRS 15

Countdown to ComplianceASC 606 / IFRS 15

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On Today’s Webinar

The material presented in this webinar has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction or relying on information shared during this presentation.”

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On Today’s Webinar

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Elevate Your ASC 606 / IFRS 15 Compliance Journey and Start Automating Today

The December 15th, 2017 deadline for ASC 606 / IFRS 15 compliance is two months away. Manual efforts, spreadsheets, and consultants might get you through your first few months, but that approach is not sustainable.

“Countdown to Compliance”Automation the end-to-end ASC 606 / IFRS 15 compliance process

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Javier ReynaldosCPA, FORMER CFO,

APTTUS SME ON ACCOUNTING AND FINANCE

Mike CarrellPRODUCT MARKETING DIRECTOR, REVENUE

MANAGEMENT© Apttus, Corp

About ASC 606 / IFRS 15

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ASC 606 / IFRS 15: Revenue from Contracts with Customers

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About ASC 606 / IFRS 15 Affects All Companies

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Public and Private Companies

Global StandardsEffective ASC 606: Dec 15, 2017

IFRS 15: Jan 1, 2018

What are ASC 606 / IFRS 15 and Why they’re Needed

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Fix inconsistencies between US and global accounting standards

Standardize revenue recognition practice across industries to improve comparability and

reduce complexity

Provide more useful information to investors

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Anonymously speaking, how ready do you feel your company is to file under the new ASC 606 / IFRS 15 accounting standards and how will you handle it?

[Please select one]

• We are ready and automated

• We are ready, and will use spreadsheets, manual efforts

• We are still planning for how we will handle this

• We have not started planning

• I’d rather not say

Polling Question #1

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ASC 606 / IFRS 15 Creates a Five-Step Rev Rec Process

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Evidence of Arrangement

Reasonably Collectible

Price Fixed and Determinable

Delivery Occurred

1

2

3

4

Identify Elements5

Allocate Revenue6

Identify the Contract(s) with a

customer1

Identify the performance

obligations in the contract2

Determine the transaction

price3

Allocate the transaction price

to the performance obligation4

Recognize revenue when the

entity satisfies a performance

obligation

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4 Criteria to RecognizeSOP 97-2, SAB 104, ASC 605

2 Additional StepsEITF 00-21, EITF 08-1

5 Steps to RecognizeASU 2014-09 (ASC 606)

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Apttus Intelligent Cloud Solves ASC 606 /IFRS 15 Compliance

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5 Steps to RecognizeASU 2014-09 (ASC 606)

Identify the Contract(s) with a customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance

obligation

Recognize revenue when the entity satisfies a

performance obligation

ASC 606 Solved with Apttus Intelligent Cloud

Apttus Contract Mgt. activated agreement(s) and

Apttus CPQ accepted proposal(s) define the contract

Products and services sold define performance

obligations

Contract terms, discounts, rebates, and promotions all

affect the expected consideration

Revenue allocation rules proportion transaction prices

by Standalone Selling Price

Revenue recognition rules applied to the products &

services are the source for journal entries into your

ERP of choice

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ASC 606 / IFRS 15 Affects Business Processes

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• Managing an opportunity through until revenue is recognized, touches all Quote-to-Cash business processes

• Automating lifecycle changes across a single database, when Contracts/Assets owned inevitably change

• Estimating the revenue stream effects of promotions and rebates

• Booking the compensation & partner incentive costs of sales

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Performance Obligations Identified in Apttus

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All performance obligations identified in Apttus Contracts & Assets Owned identified

Apttus CPQ. Seamless integration with Apttus Revenue Recognition.

Products & Services

Subscription Term

Products & Services

Subscription Term

Apttus Orchestrates All Transaction Price Information

Explicit and implicit terms which affect pricing and allocation are

all contained in Apttus.

Discount Approval

SLA Approval

Products & Services

Subscription Term

Total Price

Limits on Liability

Apttus Recognizes Revenue When Obligations Are Met

Apttus Revenue Recognition automatically handles usage-based, royalty-based, deferred recognition, immediate recognition, ratable recognition with deferred revenue, and milestone-based recognition, giving visibility into the revenue recognition schedule, and passing the pertinent data to the ERP system of record.

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Align Incentives with New Revenue Recognition Policies

ASC 606 Impact: Commission expenses associated with contracts must now be capitalized and amortized in alignment with the timing of revenue as earned

• Leverage incentives as a means to encourage sales behaviors that accelerate revenue recognition

• Easily change compensation plans based on changes to billing or collection amounts in an automatic, auditable, and transparent system

• Properly calculate commissions at the sales rep, customer or order level

Apttus Works Within Your Ecosystem

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• Service Provisioning• Usage

• Invoices• AR Master• Payments and Collections• Revenue Recognition• Financial System of Record

• Tax tables• Tax calculations• Tax line items

• eSignature

CRM System Customer

Systems

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What are the challenges you foresee in ASC 606 / IFRS 15 Compliance?

[Check all that apply]

• Difficult to identify the contracts with customers

• Challenge to determine the standalone selling price

• Difficult to handle mid-cycle changes to contracts/assets purchased

• Other

Polling Question #2

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Demonstration

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CPA, former CFO, and Apttus SME on Accounting and Finance

Getting to Cash

Billing and Revenue Recognition

“Everything is what it is, and not another thing.” –Joseph Butler, Philosopher

JReynaldos

Javier Reynaldos

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Business and Technology Trends Require a Blend of Models

19Merchandizing

CouponsDiscounts

Gifting

MulticurrencyTaxes

BundlesUpsell

Downsell

Cancellation/Activation

FeesOverage

Family PlansPricing Tiers

Grace PeriodsFreemium/Trial

One-Time TransactionsIn-App Purchases

Micro-TransactionsOne-Time Add-Ons

MonthlyQuarterly

AnnualCustom Time Frame

Minimum UseQuarterly

AnnualCustomer Time Frame

ThresholdsRolloverOverage

SurchargeRated/Mediated

Subscriptions Usage/Consumption

Milestone

Physical Wallet

MRI Scanner paid for via Usage-based billing

Internet of Things (IoT)

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Omni-channel Selling Requires Real Time Integration with Quoting and Revenue Management Systems

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First-time and Repeat PurchasesSimple, Complex, or Bulk ProductsLong or Short Sales CyclesPhysical, Digital, Subscription, Services

“Most purchasing scenarios require an equal mix of self-service andhuman-assisted service. ”

Forrester Research, B2B Omnichannel Commerce In A Machine-Driven World, Dec 2017

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Apttus Defines a 10 Step Quote-to-Cash Process1

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1 - Configure• ID correct combinations

• Choose bundles

• Make grouping recommendations

2 - Price• Price specific combination

• Apply promotions, discounts, incentives

3 - Quote• Commercial proposal generated

• Template for contract

4 – Contract Creation• Formal agreement with T&Cs, pricing, etc. drawn up

• Internal approval routing

5 - Contract Negotiation• Redlining and version controls

• Further approval routing

• Providing visibility

6 – Contract Execution• Final agreement

• Signature

• Information availability

7 – Order Fulfillment• Product delivery

• Management of SLAs

• Management of changes (e.g. adds, renewals)

8 - Billing• Invoicing, adjustments

• Collections

• Forecasting

9 – Revenue Recognition• Financial management of pricing, payment

terms, delivery

• Reconciliation to invoices

10 - Renewals• Management of expiration timelines

• Add-ons, cross-sells, up-sells

• Leverage account history

1 Source: Chapter 3 from Intelligent Quote-to-Cash – The Outcome-Based Approach to Transforming Your Business, Kirk Krappe

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AFTER DEMONSTRATION

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Apttus the World Leader in Quote-to-Cash

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AFTER DEMONSTRATION

Category Defining Enterprise SaaS Company

1300 Employees

500+ Customers, 1 Million + Users

100% Revenue Growth Rate

$41 Billion Global Market Opportunity

Proven, Experienced Management Team

$186M Investment from , KIA, ICONIQ, K1 & Salesforce

Recognized Leader Across Quote-to-Cash Categories

Defined the Category of Quote-to-Cash (QTC)

Deepest Team of QTC Experts Ever Assembled

Tier 1 Customers: Many of the Fortune 500

Community of 1M+ Users Globally

Financially Strong, Public-Market Ready

Largest Investment Across QTC Technology for Innovation

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CPQ Leader CLM Leader

B2B Order Mgt. Leader Digital Commerce Visionary

Independent Research Firms Confirm Our Leadership.

Billing Strong Performer

B2B Commerce Strong PerformerCPQ Leader

The World Leader in Quote-to-Cash

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QUESTIONS

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