How Can you Make Better Judgement Calls When it Comes to Revenue Recognition?

The effective date of the new revenue recognition guidance is, at long last, here. CFO Magazine’s recent article, How Risky Are New Revenue Recognition Rules?, says “at some point after that, we’ll begin to see whether the new standard’s principles-based methodology is working as intended.”

The article points out that there are some judgment calls that must be made when it comes to the new revenue recognition rules.

Elements of judgment reside in each step of the new standard’s five-step process, according to CFO, including:

Step 1: Identify the contract(s) with customers. The collectability of consideration in a transaction is a concept that requires judgment in both the current and new guidance. Under the new guidance, collectability will be addressed in the determination of whether a contract exists, rather than whether revenue can be recognized. While the concept of collectability is not new, the judgments used to assess it will now be necessary at the outset of the revenue recognition process.

Step 2: Identify the performance obligations within the contract(s). Identification of performance obligations will be less restrictive under the new guidance and, therefore, contracts may have fewer performance obligations to be accounted for separately. The determination of these performance obligations will also require increased application of judgment.

Step 3: Determine the transaction price. The transaction price under the contract(s) involves a number of judgments, including consideration of variable and non-cash factors. Under the new guidance, entities will determine variable consideration by estimating either the “expected” value or the most likely amount in a range of possible amounts. As variable consideration will be based on an estimate, the timing of revenue recognition may be accelerated upon implementation of the new standard as compared to the more formulaic recognition of multiple elements over time, as currently required.

Step 4: Allocate the transaction price to the performance obligations in the contract. To allocate an appropriate amount of consideration to each performance obligation, an entity will now determine the stand-alone price at the outset for the goods or services. As stand-alone selling prices can be calculated or estimated in numerous ways that may require significant judgment, revenue recognition may be accelerated under the new guidance, particularly when compared to the current allocation methods.

Step 5: Recognize revenue when (or as) a performance obligation is satisfied. Under the current guidance, the percentage-of-completion method is generally used when recognizing revenue for contracts. Under the new rules, revenue is recognized when, or as, control of the asset is transferred to the customer. The determination of when control is transferred is often a matter of judgment, and will require consideration of when obligations are satisfied.

How will you make judgment calls when it comes to these new rules?

U.S. filers are expected to adopt the new accounting standards their first reporting period after December 15, 2017. For most companies, financial statements released in 2018 will be the first in compliance with ASC 606. To ease the transition, the Boards allow filers to use practical expedients in their application of the new accounting standards and choose between two adoption methods (full- and modified-retrospective).

To learn more about the new standards, check out our ebook: Revenue Recognition Do’s and Don’ts.

Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions. From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and Robbie-2017products helps SBS Group customers maximize ROI on technology investments.

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions. Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

Is your Digital Transformation the Christmas present you thought you wanted and got, but it sucks?

Digital transformation is one of the hottest topics when it comes to IT lately. In a recent CIO article, 7 Digital Transformation Myths, several business and IT people were interviewed, including Dan Doggendorf, VP of business operations and CIO for the Dallas Stars NHL hockey team. He says to avoid a digital transformational fail, you should take the advice author Stephen Covey has about “beginning with the end in mind. Otherwise, you’re just spending money on new cool toys. It’s the Christmas present you thought you wanted and got, but it sucks.” 

Has this ever happened to you? You were dying for a Hatchimal but were disappointed after you opened it on Christmas morning? Ok, maybe not. Or the Xbox One X…ok, that sounds pretty awesome.

The article goes on to say that a successful digital transformation can deliver significant rewards. But these common misconceptions can undermine your company’s ability to achieve desired results. These are the most common myths:

Myth No. 1: Digital transformation is an IT function

I agree that this is a myth. We recommend that our clients involve more functional and operational business units than just IT in a digital transformation. To truly transform your business, you must have buy-in from all departments.

Myth No. 2: True transformation is a blue chip’s journey

We have solutions for businesses of all sizes and find that even the smallest company can successfully transform their business with Microsoft Dynamics.

Myth No. 3: Digital transformation is about reducing the workforce

People are nervous that they will be replaced by machines with all of the machine learning and IoT that’s out there now. But, as it says in the article, I think companies are seeing the opposite: The more automation and data analytics that organizations put in place, the more human beings are needed to drive the algorithms and understand what’s happening in complex buildings or manufacturing plants.

Myth No. 4. Digital transformation is all about the technology

The article says that a digital transformation is not just all about the technology, but invest[ing] in building the right culture, and also in the transformation of the IT function, including new skills and partnering opportunities.

This is where you must think about new and better ways to delight your customers. Microsoft Dynamics 365 for Sales and Customer Service empowers sales, marketing and customer service with insights to personalize relationships, predict customer needs, and increase sales.

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Myth No. 5: Executive buy-in is a sure thing

You can’t always count on executive buy-in, and if executives are not fully on board with your project, it won’t be successful. Involve executives in digital transformation meetings from the get-go.

Myth No. 6: Digital transformation brings IT-business harmony

It’s not always harmonious when business people and IT people are in the same room. That’s what we are here to help with. SBS Group has a streamlined approach that ensures everyone is operating from the same blueprint, helping you realize business value faster.

Myth No. 7. The digital journey ends at implementation

Often companies believe go-live is when their digital transformation ends, and this simply isn’t true. Without regular check-ups, training, and re-training, there is a danger of low user adoption and a wasted IT budget. SBS Group’s E3 system integrates strategic planning, ERP and CRM, Business Intelligence and Analytics together, enabling the entire organization to create, communicate, measure and manage plans, objectives, and initiatives at the organization, team, and individual level.

I hope that you don’t fall into the trap of these digital transformation myths this holiday season. Let us know if you have a concern about any of the seven above and we can help. Join us for one of our upcoming webcasts where we talk about how Dynamics 365 can help.

Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions. From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and Robbie-2017products helps SBS Group customers maximize ROI on technology investments.

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions. Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

 

What Additional Project-driven Solutions can Strengthen your Microsoft Investment?

You’ve already made quite an investment in Microsoft technology. And it can be confusing to determine what else works for service and project-driven company like yours. To accelerate your digital transformation, you need a new type of business application. One that breaks down the silos between CRM and ERP, that’s powered by data and intelligence, and helps capture new business opportunities.

In our webcast last week, we covered 10-12 different Microsoft software solutions that can strengthen or round out your Microsoft solutions. We talked about a few different ERP options as well as small and large project management solutions and some really cool apps included with Office 365.

We help you determine how to meet the unique needs of your organization with a modern business platform that makes it easy to tailor and extend Dynamics 365 applications—with little to no code development. Quickly build apps, automate workflows, and bring additional data insight into your business with the Microsoft business application platform.

If your company provides professional services and relies on delivering successful, profitable projects, then you should check out the recording.

Here are a few products and tools you can expect to see:

* Microsoft ERP Comparison: Dynamics 365, Dynamics SL and Dynamics NAV

* Microsoft CRM and PSA Simplified: Dynamics 365 for Sales and Project Service Automation

* Microsoft Office 365 Hidden Gems: Microsoft Planner, Microsoft Project, Microsoft Teams, SharePoint and Yammer

Don’t worry. We didn’t forget Excel…we know how much you love it!

If you thought Excel was the only tool in the Microsoft arsenal capable of managing projects, you’re going to be surprised.

Recorded Webcast: Microsoft Mash-Up

This is the second in a series of webcasts targeting project-driven companies. This  1-hour recorded webcast pulls a variety of solutions together for project-driven companies, including ERP, Sales, Marketing, Project Management and Business Productivity. Check out upcoming events.

In our recorded webcast, we demonstrate how our clients are utilizing multiple Microsoft solutions to improve project profitability, employee productivity and customer engagement…without breaking the bank. Let me know what you think about the webcast, and send any questions that you may have my way.

Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and Robbie-2017products helps SBS Group customers maximize ROI on technology investments.

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

 

Microsoft NAVUG Summit Provides Product Roadmap

There were almost as many product announcements as cowboy hats at NAVUG Summit 2017 in Nashville. For Dynamics NAV users, Microsoft’s roadmap guidance was clear: NAV will continue to receive yearly updates, and customers who want to remain on-premise or hosted (non-SaaS) can do so. Customers can expect Dynamics 365 “Tenerife,” when it arrives in 2018, to offer both a SaaS option and an on-prem roadmap for NAV.

Codename Tenerife

The NAV/Tenerife product roadmap now calls for Dynamics NAV 2018 in fall 2017, with a December 1 general availability date expected; then NAV 2018 R2 in Spring 2018 alongside the initial Tenerife launch. Beyond NAV 2017 R2, Dynamics NAV will adopt a new name under the Dynamics 365 brand, but the software continued updates to the same product, said Marko Perisic, Dynamics 365 R&D general manager. “Codename Tenerife will be rolled up into the Dynamics 365 brand,” Perisic said. “It is an important brand that Microsoft is putting its weight behind.”

Is it me, or does this codename business make you feel like a spy?

Important Release Dates to Remember

Dynamics NAV 2018: DEC 1

Dynamics NAV 2018 R2: Spring 2018

Codename Tenerife: Spring 2018

NAV 2018 Productivity Updates

Microsoft program and product managers showed off a range of productivity updates that will be included in NAV 2018. Office integration will continue to expand in NAV 2018, with an eye toward more streamlined processes. Microsoft demonstrated a quote-to-cash process executed entirely in Outlook, driven by NAV. After creating a quote, order, and invoice from Outlook, the customer can also pay the invoice via their Microsoft account, again from Outlook.

Within the NAV 2018 web client, the in-app designer will allow for users to personalize their own experiences by rearranging interface elements and adding and removing fields. Global interface changes completed with the in-app designer are saved as NAV extensions, meaning they should be manageable and stable across core system updates.

Tenerife User Interface Updates

There is a revamped user interface coming with Tenerife that will aim to simplify role centers, with more visible information and actions moved higher on the page for easier access. The left-side menus will be moved to the top of the screen to add more real estate to content. List pages will be redesigned to look more like financial reports. And the preview shown at Summit featured a monochrome look and feel that Microsoft believes will improve the visual impact, especially around data visualizations.

Microsoft has positioned Dynamics 365 Tenerife as a business application platform that offers a full range of capabilities, backed up by the Common Data Service for augmenting apps as needed. Microsoft wants customers to look at it as a solution that can be augmented easily with standalone Dynamics 365 apps like Sales, Marketing, Talent, and service using Common Data Service.

Cloud-first

Microsoft made it clear that Dynamics 365 for Finance and Operations – Business Edition (formerly NAV), is a “cloud-first” solution. “Emphasis has to be on the cloud, but it’s important to recognize and know [that] despite trends, we have a huge customer base and Microsoft will not leave any of those customers behind,” said Perisic. “We recognize you have installations on your own hardware and we will continue to support that. And because of that we’re not a cloud-only company, we’re a cloud-first company. Make investments there first and mirror those for customers who are on-premises. We see it as an advantage to provide that choice.”

Let us know if you have any questions about these latest product updates for Microsoft Dynamics 365 and/or NAV.

Best regards,

Dave Drouin
EVP of Professional Services, SBS Group

About David Drouin

David is a graduate of Wharton School of Business with a B.S. in Accounting and Economics.  After graduation, he began a twenty year career in public accounting, including five years as a partner where he built a successful systems advisory practice and managed it as partner-in-charge.

David joined SBS Group in 2006 as the Executive VP of Finance before taking on his current role as Executive VP of Professional Services.Dave Drouin, Executive Vice President, Professional Services at SBS Group

In addition to his business and accounting background, David has strong technical skills which he has leveraged in helping hundreds of small businesses and large enterprises evaluate and implement ERP systems in his nearly thirty years in technology services sector.​

https://www.linkedin.com/in/daviddrouin

Dynamics 365 for Talent Even Stronger with Addition of Attract and Onboard Apps

More than 25,000 people descended upon Orlando, Florida, for this week’s Ignite conference, and as usual, there were lots of announcements about product and innovation.

Microsoft announced that Microsoft Dynamics 365 is getting smarter and more customizable with AI enhancements and modular apps designed for specific business processes. Last month I talked about Dynamics 365 for Talent, and now we are pleased to announce that it’s even better. Two new modular apps will be available as part of Dynamics 365 for Talent later this year: Dynamics 365 for Talent: Attract and Dynamics 365 for Talent: Onboard.

Dynamics 365 for Talent: Attract

Integrates data from Dynamics 365 and LinkedIn to help identify qualified candidates and track applicants for positions. The app is designed to profile the most qualified candidates for your company and role, gain insights into the hiring pool, and improve the return-on-investment (ROI) of the hiring process.

Find, interview, and hire the right people

  • Quickly find the talented people you need and deliver more engaging candidate experiences with native integration to LinkedIn and streamlined, collaborative experiences across candidates, recruiters, hiring managers, and interviewers.
  • Simplify candidate evaluation with visibility into LinkedIn profiles throughout the hiring process
  • Improve communication with native integration to LinkedIn InMail and mobile feedback capabilities
  • Streamline interviews using Office 365 to coordinate calendars and set appointments

Dynamics 365 for Talent: Onboard

An onboarding app to help human resources (HR) train new hires and personalize the onboarding process.

Set up new hires for success

  • Help new employees hit the ground running while feeling impactful and connected throughout those first few critical months.
  • Increase productivity by identifying critical contacts and sharing resources and relevant documents
  • Personalize the pre-boarding and onboarding experience with customizable onboarding guides
  • Monitor onboarding success with real-time dashboards

Dynamics 365 for Talent begins to take full advantage of integration with LinkedIn, and is startlingly easy to use. We were able to deploy it within 21 days, and our teams were able benefit immediately. It closes a key gap in the Dynamics 365 ecosystem and will help us empower our employees around the world to be better informed, more connected, and more productive.
Eric Reading
Executive Vice President, Chemonics International Inc.

These two new modular apps join with three other apps: Engage, Learn and Optimize, to round out the D365 for Talent offering. The Human Capital Management (HCM) application is cloud-based and utilizes Microsoft Common Data Services. The Talent application can be licensed as a stand-alone solution or part of the larger Unified Operations Dynamics 365 Plan. Let us know if we can answer questions about D365 for Talent today!

Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and Robbie-2017products helps SBS Group customers maximize ROI on technology investments.

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

 

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