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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.”
This webinar may include forward-looking statements that are subject to uncertainties and risks that could cause actual results to vary materially from what is suggested or discussed here.
On Today’s Webinar
3 © Apttus, Corp
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
© Apttus, Corp
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
© Apttus, Corp
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
© Apttus, Corp
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
© Apttus, Corp
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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