Intacct Delivers New Automated Revenue Recognition Management Solution

Intacct is on a roll, continuing to promote itself as a provider of best-in-class cloud enterprise resource planning (ERP) software, primarily for mid-size services—people-centric—companies.
 
Here we delve into Intacct’s approach to cloud ERP and financial software, and the recently announced Intacct Contract and Revenue Management. The latter could help your enterprise navigate complex upcoming revenue recognition guidelines.
 
The Intacct cloud ERP software footprint includes accounting, cash management, purchasing, vendor management, financial consolidation, subscription billing, revenue recognition, project accounting, fund accounting, inventory management, and financial reporting applications. The ERP software provider also works with partners to deliver manufacturing cloud ERP software capabilities within some manufacturing opportunities. 

Intacct's Growth Continues

Intacct is used by more than 11,000 organizations, from startups to public companies, with its sweet spot being companies with 20 to 2,000 employees and with $10 million to $500 million in revenues, primarily based in North America at this stage. Intacct’s largest customer reportedly records over a million monthly transactions by over 3,000 users in over 660 entities. The software provider has had continuous momentum in expanding deals with existing customers, adding both users and more cloud ERP software modules.
 
These solid results are across all channels: direct sales, via resellers, and via certified public accountants (CPAs). Over 120 leading CPA firms and value-added resellers (VARs) offer Intacct to their clients. Recently, athenahealth decided to integrate and sell Intacct with its revenue cycle management service. The intent is to create a comprehensive financial solution for health care companies, initially targeted at hospitals. American Express ACH Payments are now available from within Intacct software. The idea is to streamline vendor payments in a bank-agnostic manner, and to expand on Intacct Express Check Delivery Service via Amex.
 
Last but not least, Intacct is now a Platinum Independent Software Vendor (ISV) Partner of Salesforce, which expands a 10-year relationship with the software giant, and increases co-selling opportunities. It is also recognition of sorts, given Salesforce’s vested interest in success of FinancialForce, a fierce Intacct competitor and Salesforce’s joint venture. The Intacct Collaborate solution that leverages the Salesforce Chatter social platform already has over 10,000 users, given that it is available for non-Salesforce users. 

Enter Intacct Contract and Revenue Management

Intacct Contract and Revenue Management was designed to help companies navigate the complexities created by the upcoming ASC 606 and IFRS 15 revenue recognition guidelines. As outlined in the press release:
 

“Starting in 2018 for public companies and 2019 for private companies, ASC 606 and IFRS 15 revenue management guidelines from the Federal Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) will require companies to reallocate revenue each time a customer contract changes and defer expense recognition to align with the contract's delivery. As a result, contract add-ons and renewals must be integrated into a single contract and will trigger reallocations across both past and future periods—causing continuous revisions to revenue allocations and expense alignment.”

In other words, expense amortization, revenue amortization, and revenue reallocations are the accounting similarities between the current and new guidelines. The following are the accounting differences in the new revenue recognition guidelines:
 

• No more recognizing revenue on cash receipt
• The focus is on a single customer contract
• More frequent reallocation
• More frequent expense deferral

 
All active contracts must be stated under existing revenue recognition guidelines until the transition, and then under new guidelines after the transition. Thus, the influence of the new revenue recognition guidelines will impact companies much earlier, as any existing customer contract that extends beyond the start date will be affected. Furthermore, most companies will need to recast prior-period financial statements using the new guidelines in advance of the start date in order to provide proper comparative and future guidance to investors. The transition to 2018 (for public companies) and 2019 (for private companies) deadlines must be addressed soon, if not now.
 

Figure 1. Intacct Journal Entry with dual reporting
 
Coping using typical measures will be impossible for reallocation for contract changes, business growth and revenue forecasting, dual reporting during the transition, and regular deferral of expenses. To that end, Intacct Contract and Revenue Management—an automated solution to the new complexities created by ASC 606 and IFRS 15—was designed to make companies audit-ready, while being able to simultaneously manage revenue using both current and new accounting guidelines. Companies can discern future impacts with forecasts based on both guidelines, get a better handle on future receipts with detailed billing forecasts, and track according to their business model with instant insights into the software as a service (SaaS) subscription billing metrics such as price by CPM (cost per thousand), discount tiers, and minimum flat fee with usage price lists.
 

Figure 2. Intacct Contract Margin Detail with dual reporting
 
For joint Intacct and Salesforce customers, Intacct Contract and Revenue Management also enables companies to structure workflows to capture and edit contracts natively in the Salesforce user interface (UI), with no need to import and rekey data. Intacct is thus setting the bar higher for its fiercest competitors, including NetSuite, Acumatica, and FinancialForce. While NetSuite just released similar capabilities at its SuiteWorld 2016 conference, none of the other cloud ERP software companies has announced a solution that can handle the new revenue recognition guidelines in ASC 606 and IFRS 15.
 
In contrast, Intacct already has a comprehensive out-of-the-box solution to these changes, including dual treatment at the transaction level and dual reporting based on both current and new guidelines, simultaneously (see figures 1 and 2). By mere configuration (and not scripting), customers will be able to disclose with confidence using automated dual-treatment, eliminate uncertainty with dual reporting, and handle reallocation and amortization with comprehensive automation.
 
I am sure other cloud ERP software vendors will eventually announce something (as their customers will need a solution). But when they do, prospective and existing users should watch for how automated the solution is and how much it relies on things like scripting or bolt-on solutions—which can require IT support and may break over time—or pesky spreadsheets that will require a huge accounting workload. 

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