I attended a local Users Group meeting last week for one of the leading Association Management software applications and a user asked about the new Revenue Recognition standard for non-profits. She wondered whether the Association Management solution that we were all there to discuss would be ready when the new standard goes into effect.
For those of you that are unfamiliar with the new standard, the core principle underlying it is to “Recognize revenue for the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled”. For example, a member of a trade association pays annual dues that includes a subscription to 12 issue trade magazine. In this instance, there are thirteen performance obligations and 2 separate revenue streams. Revenue would be allocated between membership income and publication income. The portion of the dues payment attributed to the magazine would be recognized as each issue is published and the remainder would be recognized ratably over the membership period. This is simple if performance obligations do not cross reporting periods (not so simple if multiple reporting periods are involved).
The good news is that the new standard does not go into effect until after December 15, 2018 which is 2 ½ years away. You may wonder, given the long window of time, why someone would express concerns at this time. Surprisingly, though, the consensus in the room was that there was absolutely no confidence that the vendor would be ready in time. My initial response to this was, Really? How can that possibly be? They have over two years to get ready.
Actually, if you sit back and think about it, it’s not that surprising. The reason is that the Association Management application that we’re referring to is a legacy client-server application that was built on older technology. And then, on top of that, the vendor is tasked with supporting multiple versions of it. It’s like turning the Titanic to make these significant changes. It just can’t be done quickly.
This is why true cloud-based, SaaS applications make so much sense. Take Intacct, the leading cloud-based financial accounting software solution, for example. Intacct is a true multi-tenant SaaS application built on modern technology. That means that there is only one version of the software. Everyone is always on the most current version. For that reason, combined with better technology, Intacct can innovate and incorporate new functionality much more quickly that legacy vendors can. Intacct literally releases major updates every quarter. And, the updates are totally seamless to the users. The benefits to the user are tremendous. Unlike the users at the Users Group that I was at, Intacct users never have to worry about their application not keeping up with new standards and regulations. Can you say that about your software?
Author: James Meyer
To learn more about Intacct, cloud computing or Maner Costerisan, please visit our website at www.manersolutions.com.
Maner Costerisan specializes in helping non-profit organizations move to the cloud with Office 365 and Intacct, the leading cloud-based financial accounting software solution for Associations and other Non-Profits. Vision, speed and accuracy are the keys to organizational success. Maner Costerisan understands these principles and has provided them to clients for over 100 years. As a CPA firm, we understand the importance of customer service. We are a professional services firm first and foremost and our focus is on the well-being and business success of our clients. With a highly satisfied client base of over 175 software clients, Maner Costerisan is the premiere mid-Michigan provider of financial accounting and ERP software solutions.