#asc-606-revenue-recognition-examples

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Generating revenue in business is undoubtedly gratifying, but it's crucial to pause and ask: Has your business genuinely 'earned' that money? The spotlight on how the revenue recognition principle impacts financial reporting has intensified, especially with the introduction of the Accounting Standards Codification (ASC) 606 in 2014 by the Financial Accounting Standards Board (FASB).

This standard, incorporated into the Generally Accepted Accounting Principles (GAAP) in the U.S., brought consistency to how companies should recognize revenue, especially in situations where the timing, nature, or certainty of revenue might pose challenges.

The International Accounting Standards Board (IASB) echoed this move by introducing similar guidelines under the International Financial Reporting Standards (IFRS). These guidelines aim to help businesses determine when they can legitimately consider revenue as 'earned' and subsequently update their financial statements.

Curious about when your company should recognize its revenue? Dive into our comprehensive guide on revenue recognition, where we'll explore the latest and most critical aspects.

How to Fulfill the Revenue Recognition Principle?

Step 1: Contract Identification Begin your revenue journey by identifying the contract with your customer.

Step 2: Obligation Identification Pinpoint the specific promises or obligations within that contract – what are you committed to delivering to your customers?

Step 3: Transaction Price Determination Determine the exact price or consideration for the transaction.

Step 4: Allocation of Transaction Price Allocate the transaction price to the promises or obligations identified earlier.

Step 5: Revenue Recognition Recognize the revenue when promises are fulfilled, and goods or services are delivered, transferring the earned revenue to your general ledger and financial statements.

Remember: Revenue recognition is not just a technicality; it's the ethical cornerstone of financial reporting, reflecting when value is delivered and financial obligations are met.

Importance of Revenue Recognition in the Business World

Picture this: In financial reporting for public companies, adherence to a set of rules known as GAAP accounting is crucial. One of the key stars in this accounting standard is the 'Revenue Recognition Principle.' This principle plays a simple yet critical role – revenue should be recognized when rightfully earned.

And why is this so vital?

Firstly, it prevents companies from manipulating financial reports – no cooking the books. Secondly, it provides a crystal-clear view of a company's financial well-being, akin to having a trustworthy health report for a corporation.

Revenue recognition is a fundamental accounting principle governing how and when a company should recognize revenue in its financial statements. Proper revenue recognition is critical because it directly impacts a company’s financial reporting, financial performance, and the transparency of its financial statements.

How Revenue Recognition Affects Financial Reporting:

1. Accurate Income Statement: Recognizing revenue at the appropriate time ensures that the income statement accurately reflects the company’s financial performance during a given period.

2. Matching Principle: Proper revenue recognition ensures that expenses and revenues are matched, providing a more accurate picture of profitability.

3. Consistency and Comparability: Consistent revenue recognition practices are essential for meaningful comparisons between financial statements of different periods or companies.

4. Investor Confidence: Proper revenue recognition enhances investor confidence, offering a clear and transparent view of a company’s financial health.

5. Compliance with Accounting Standards: Adherence to accounting standards is crucial, and companies must follow them to ensure compliance.

6. Timing of Revenue Recognition: The timing of revenue recognition can affect financial metrics, such as earnings per share, net income, and operating margins.

7. Impact on Ratios and Metrics: Revenue recognition can influence various financial ratios and metrics, including current ratio, debt-to-equity ratio, and return on assets.

8. Cash Flow Reporting: Revenue recognition affects the cash flow statement, impacting a company’s operating, investing, and financing cash flows.

9. Audit and Regulatory Compliance: Accurate revenue recognition is critical for the auditing process and compliance with accounting standards and regulations.

10. Disclosure and Footnotes: Detailed disclosures and footnotes in financial statements explain revenue recognition policies, enhancing transparency.

In conclusion, revenue recognition plays a pivotal role in financial reporting. Accurate and consistent practices are essential for providing stakeholders with reliable financial information, ensuring compliance, and supporting investment and lending decisions. Companies must follow relevant accounting standards and exercise good judgment in determining when to recognize revenue.

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Accounting for Virtual Goods and Digital Currency: Challenges and Opportunities

The rise of virtual goods and digital currencies, particularly in online gaming, social media, and financial markets, has brought forth new challenges for accountants and businesses. As digital assets like cryptocurrencies and in-game currencies grow in popularity, the need for robust accounting systems that can handle these intangible assets has become more critical. For Chartered Accountants (CAs) and aspiring professionals, understanding the complexities surrounding the accounting of virtual goods and digital currencies is essential. In this article, we delve into the challenges and opportunities in accounting for virtual goods and digital currency, highlighting the role of CAs and key study resources such as CA Entrance Exam Books, Scanner CA Intermediate Books, Scanner CA Foundation Books, and Scanner CA Final Books for CA students.

What Are Virtual Goods and Digital Currency?

Virtual goods are digital items or assets that exist solely in virtual environments, such as online games, social media platforms, and virtual marketplaces. Examples include in-game currency, avatars, skins, and digital assets in virtual reality platforms. These goods typically have value within their respective platforms, but they may or may not be convertible into real-world currency.

Digital currency, on the other hand, refers to money that exists only in digital form. Cryptocurrencies, like Bitcoin and Ethereum, are examples of digital currencies that use blockchain technology for decentralized transactions. Digital currencies can be traded, held as investments, and even used for real-world transactions in certain situations.

Challenges in Accounting for Virtual Goods and Digital Currency

Accounting for virtual goods and digital currencies presents several unique challenges, primarily due to their intangible nature and the lack of clear, uniform accounting standards. Some of the key challenges include:

1. Valuation and Recognition

One of the most significant challenges in accounting for virtual goods and digital currencies is determining their value. Virtual goods often do not have a standardized market price, which makes it difficult to establish a fair value for reporting purposes. For example, in-game items or virtual currency might be priced differently across platforms or based on supply and demand within a game.

Similarly, digital currencies can experience high volatility. Cryptocurrencies like Bitcoin have demonstrated extreme price fluctuations, making their valuation for accounting purposes complex. Unlike traditional assets, these digital assets may not have a direct correlation to fiat currency values or tangible goods, creating challenges in recognizing and measuring their value accurately.

2. Revenue Recognition

Revenue recognition is another challenge when accounting for virtual goods and digital currencies. Businesses often generate revenue from the sale of virtual goods, in-game purchases, or trading of cryptocurrencies. However, under traditional accounting principles, recognizing revenue from these digital transactions is not straightforward.

For instance, when a player purchases virtual goods in a game, should the revenue be recognized immediately, or should it be deferred until the goods are used or consumed? The treatment of digital currency transactions presents similar challenges, especially if the cryptocurrency is traded as an investment rather than used for goods or services. Accounting standards such as IFRS 15 or ASC 606 provide guidelines for revenue recognition, but their application to virtual goods and cryptocurrencies is still evolving.

3. Regulatory and Tax Issues

Virtual goods and digital currencies are subject to varying regulations depending on the jurisdiction. The lack of consistent global regulations complicates the accounting treatment for tax purposes. While some countries treat cryptocurrencies as taxable assets or capital gains, others may classify them as commodities or currency.

Similarly, the tax treatment of virtual goods is complex. In some cases, in-game purchases may be subject to sales tax, while in other jurisdictions, they may not be. CAs must ensure that businesses comply with local tax laws regarding the sale and exchange of digital assets, while also keeping an eye on global regulatory trends.

4. Internal Control and Fraud Prevention

The digital nature of virtual goods and cryptocurrencies presents security concerns, especially regarding fraud, money laundering, and cybercrime. The anonymous nature of many digital currency transactions can make it difficult for businesses to track and monitor financial activities. Additionally, virtual goods may be sold through third-party platforms, raising concerns about the legitimacy of transactions.

Accountants must develop strong internal control systems to mitigate these risks. This involves implementing safeguards to detect fraudulent transactions, ensuring that digital assets are accurately recorded and safeguarded, and monitoring any transactions that could potentially violate anti-money laundering (AML) regulations.

Opportunities in Accounting for Virtual Goods and Digital Currency

While there are challenges, accounting for virtual goods and digital currencies also presents several opportunities for businesses and accounting professionals alike.

1. Growth in Digital Economy

The rise of virtual goods and digital currencies has given birth to new industries, creating opportunities for businesses to tap into growing markets. As the digital economy expands, companies that deal in virtual goods or cryptocurrencies will need professional accountants to navigate the complexities of financial reporting, compliance, and tax planning. This opens up new career paths for Chartered Accountants who specialize in these areas.

2. Blockchain Technology and Smart Contracts

Blockchain technology, which underpins many digital currencies, offers new possibilities for accounting. Smart contracts—self-executing contracts where the terms are directly written into code—can automate and streamline accounting processes. CAs can leverage blockchain technology to improve transparency, reduce fraud, and ensure secure transactions in the digital space. Blockchain could revolutionize accounting practices, making transactions more efficient and tamper-proof.

3. Advisory Services for Digital Asset Management

With increasing interest in digital currencies, businesses and individuals need professional advice on managing digital assets. Chartered Accountants can offer advisory services on how to handle digital currencies as investments, guide clients on regulatory compliance, and help with strategies for revenue recognition related to virtual goods. This creates an additional avenue for accountants to provide value-added services to businesses.

4. Global Expansion of Digital Markets

Virtual goods and digital currencies are not confined to a single geographic region. They transcend borders, which means companies dealing with them can access a global marketplace. Chartered Accountants will play a vital role in helping businesses expand into international markets while ensuring compliance with varying tax regulations, local laws, and accounting standards related to virtual goods and digital currencies.

How CA Students Can Prepare

As the digital economy grows, CA students must prepare themselves for the emerging trends in virtual goods and digital currency accounting. Key study resources like CA Entrance Exam Books, Scanner CA Intermediate Books, Scanner CA Foundation Books, and Scanner CA Final Books are invaluable tools in this preparation.

CA Entrance Exam Books – These provide foundational knowledge of accounting principles and financial reporting that can be applied to digital assets.

Scanner CA Foundation Books – These resources help students build a strong base in accounting and taxation, which is crucial when dealing with virtual goods and digital currency.

Scanner CA Intermediate Books – At the intermediate level, students can explore more specialized topics related to taxation, auditing, and revenue recognition, all of which are relevant to digital currency transactions.

Scanner CA Final Books – These books provide advanced case studies and scenarios involving complex financial reporting and accounting for intangible assets like virtual goods and cryptocurrencies.

CA Foundation Scanner, CA Intermediate Scanner, and CA Final Scanner – These scanners offer practice questions on emerging topics such as blockchain, digital currencies, and virtual goods, helping students stay up-to-date with evolving trends.

Conclusion

The accounting for virtual goods and digital currency presents both challenges and exciting opportunities for businesses and accounting professionals. While issues such as valuation, revenue recognition, regulatory compliance, and fraud prevention require careful attention, the rise of digital assets also creates new career paths and business opportunities. Chartered Accountants must adapt to these changes by staying updated on new developments in digital finance, leveraging resources like CA Entrance Exam Books, Scanner CA Intermediate Books, and Scanner CA Final Books. As digital markets continue to evolve, CAs will play an increasingly vital role in ensuring proper accounting and compliance for virtual goods and digital currencies.

This article incorporates the requested keywords while providing an overview of the challenges and opportunities in accounting for virtual goods and digital currencies, with specific reference to CA exam preparation materials.

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Revenue Recognition in Construction Examples

Revenue recognition in construction is the reporting of revenue and profits by construction companies in their financial statements. Revenue recognition in construction is a challenging and complex process as construction contracts are mostly long-term and complex. Five Steps of Revenue Recognition According to the Accounting Standards Codification (ASC) 606 and IFRS 15 standards, there are…

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Know More about Technical Accounting Services at Contetra

Technical accounting services are specialized accounting services provided to companies to help them comply with complex accounting regulations and standards. These services are typically offered by accounting firms and involve highly specialized knowledge and expertise in areas such as accounting standards, financial reporting, and tax compliance.

Examples of technical accounting services include:

Implementation of new accounting standards: Technical accounting services providers can help companies understand and implement new accounting standards, such as ASC 606 (revenue recognition) or ASC 842 (lease accounting).

Financial statement preparation: Technical accounting services providers can assist companies in preparing complex financial statements, such as those required by the Securities and Exchange Commission (SEC).

Technical research: Technical accounting services providers can research complex accounting issues and provide guidance to companies on how to properly account for them.

Audit support: Technical accounting services providers can assist companies in responding to auditor requests and addressing any audit findings related to accounting issues.

Overall, technical accounting services are essential for companies that operate in highly regulated industries or have complex accounting needs, as they provide valuable expertise and support to help ensure compliance and accuracy in financial reporting.

If you are looking for Technical accounting services then please go through below link :

https://contetra.com/technical-accounting-international-gaap-advisory-services/

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The Sales Commission Dictionary

This lexicon is based on our years of experience in working with clients from a variety of industries to compute millions of Dollars in Commissions. We attempted to provide credit to such sources whenever possible. If you believe we are incorrect about a term or have failed to give credit to the creator of a definition, please contact us and we will rectify the record. We hope you like this vocabulary and find it useful.

Dictionary of Sales Commission Terms

Before you start reading further, we must inform you that the definitions mentioned here are written to the best of our judgment and may be wrong based on the context, region, and industry.

Accelerator

A higher commission rate raises a representative’s compensation in comparison to what she would have received on her standard commission rate. Accelerators are used to recognize and reward exceptional performance. They usually kick in once a salesperson has met his or her quota.

Example: Jennifer will earn $10,000 if she meets her quota of $100,000, implying that her basic commission rate is 10%. When Jennifer meets her quota, her commission rate increases to 12 percent as an added incentive to keep up her excellent performance.

Also known as: ramped rate, kicker

Achievement

A measure of a sales representative’s performance about her quota. Actual sales performance is divided by quota to determine achievement as a percentage.

• Example Sarah sells $60,000 against a quota of $80,000. As a result, her success rate is 75%.

• Also known as accomplishment

Active User

Any user who interacts with a business over a set length of time is considered an ��active” user.

Agent

A sales agent is a self-employed salesman who is recruited by one or more businesses to market their products or services and enables the signing of sales contracts between the business and its consumers.

Analytics

Analytics, often known as sales analytics, refers to the tools and methods used to gather, monitor, manage, and analyze sales data. It assists the sales team in making educated judgments regarding prospects and customers, product lines, market potential, and sales team performance.

Annual Bonus

An annual bonus is an amount of money provided to workers each year in addition to their base wage. It may or may not be connected to an employee’s performance. Some organizations, for example, provide a percentage of the overall salary as a bonus (which changes depending on the employee’s performance), whilst others award a fixed bonus each year.

Annual wage adjustment

An annual pay adjustment is a yearly increase or decrease in salaries based on a certain plan formula.

ASC 606 Standard

A revenue recognition standard, often known as an accounting standard. This standard specifies that revenue should be recognized when the contact between a customer and a firm is satisfied, i.e. when a company fulfills its performance duty by delivering a promised item or service to a client.

At-risk pay

Performance-based pay is a type of pay that is dependent on how well you perform. It is not guaranteed pay in the way that a salary would be. The majority of sales compensation plans include an “at-risk” component depending on performance. This risk component is paid in addition to the base salary.

• Other names for incentive compensation, variable compensation, and pay-for-performance.

Attainment

A measure of a sales representative’s performance about his quota. Attainment is measured as a percentage by dividing actual sales performance by quota.

• For instance, Rico sells $60,000 against a quota of $80,000. As a result, his achievement rate is 75%.

• Also known as accomplishment

Base Salary/Base Salary

Base pay, often known as base salary, is the minimum payment a person receives based on their job posting and credentials. The sum is determined by Human Resources rules and is exclusive of any other kinds of remuneration, perks, or incentives.

Best Practices

Best practices are tried-and-true processes or approaches that provide outcomes that are superior to those obtained by other means and are sometimes referred to as the standard. These practices are followed by salespeople and sales managers to achieve their aims and objectives in the best way possible.

Bonus

A sales bonus is an incentive payment that is often triggered by a yes/no decision (e.g., did the sales rep achieve a threshold? If so, pay a bonus). This is not the same as a commission, which is paid progressively when greater levels of performance are attained (i.e. a rep may make a commission on each deal). It’s crucial to remember that not all sales compensation experts use the same terminology. Some sales compensation professionals use the terms “bonus” and “commission” interchangeably.

Cap

A cap is an upper limit or limitation set on the amount of money that may be spent. It is the highest financial remuneration an employee may earn in a specific period in sales.

Channel

A sales channel is a means used to distribute or sell items or services to the market. A company’s products or services might be distributed or sold through direct (website, salesforce, etc.) or indirect (brokers/agents, partners, etc.) channels.

Clawback

A clawback occurs when a company reverses or recovers a previously provided reward. Clawbacks typically occur when a consumer returns a product or cancels a contract on which a sales representative has been paid. They can, however, develop merely because there were flaws in the initial computation (e.g., the sales amount was entered incorrectly).

Coaching

Coaching, sometimes known as sales coaching, is an important component of performance management. It is the process of increasing a team’s or an individual’s performance by inspiring, training, and assisting salespeople to reach their goals. The ultimate objective is to improve KPIs (key performance indicators) like revenue growth and customer satisfaction.

Commission per sale

The most basic of all sales compensation plans. This sort of plan pays a basic percentage of each transaction, so a sales representative shares a piece of the money generated for the firm. These plans, unlike On-Target Commission programs, do not have a quota attached to them. These are often known as flat commission programs or unit rate arrangements.

•As an example, residential real estate brokers who get paid 3% of each house sale are on commission-per-sale arrangements.

Commission rate  

A sales commission rate links a salesperson’s success to monetary remuneration. It is often fixed and stated as a percentage.

For example, if you establish a 20% sales commission rate and a salesperson sells $10,000 in items in a month, you must pay him/her a $2000 commission.

Commission Tracking Software  

Also known as Incentive Compensation Management Software is software that automates the process of computing sales compensation and tracking salespeople’s commissions and performance.

Commissions

Commissions are a type of remuneration. Individuals receive “variable” rewards since they are contingent on performance. Commissions are often calculated as a proportion of the sale volume, revenue, gross margin, or other criteria. Commissions are paid on top of other types of remuneration, such as salary.

Commissions Expenses

Commission expenditure is an accounting phrase that refers to an entry that is used to reflect a company’s responsibility for salesperson remuneration.

Compensation Administration

Compensation administration is a subset of human resource management that handles claim monitoring and administration, report development, revenue recognition, and communication with employees, managers, insurance carriers, medical personnel, and attorneys.

It refers to the planning, organization, and management of direct and indirect payments made to employees for the work they do.

Sales management can choose from three main pay plans: salary, commission, and combination (salary + incentive).

Compensation Management Software

Compensation Management Software (CMS) is a program used to evaluate and update compensation policies, schedule bonuses, and commission components, and suggest pay modifications.

Compensation Strategy

A compensation plan is a high-level method to align a company’s incentives, perks, salary, and other types of payment with its goals.

Configuration, Pricing, and Quotation (CPQ)

Sales personnel may use CPQ systems to create correct product or service selections, pricing, and quotations. Such systems are distinguished by their ability to respond quickly and accurately to prospects’ demands while eliminating quotation mistakes and rework.

CRM  

CRM (Customer Relationship Management) software is designed to aid a company’s interactions with customers, clients, and sales prospects as they go through the sales funnel.

Salesforce Sales Cloud, SAP, Oracle, and Microsoft Dynamics 365 are examples of such software.

Decelerator

A decelerator is the inverse of an accelerator. A decelerator is a lowered commission rate that reduces a representative’s compensation in comparison to what she would have earned with her basic commission rate. Decelerators can be used to punish poor performance (before a representative reaches quota) or to avoid excessive rewards (after a rep hits quota). Decelerators may demotivate a sales representative and should be used with caution.

Example (penalizing bad performance): Jennifer will earn $10,000 if she meets her quota of $100,000, implying that her basic commission rate is 10%. To compensate for below-average sales performance, her commission rate on all transactions up to $100,000 is only 8%.

Example (to minimize excessive payouts): When Jennifer meets her quota, her commission rate increases to 12 percent. This is a performance accelerator designed to recognize and reward exceptional performance. However, sales management has a strict budget for sales commissions and prefers to avoid large payouts. So, after Jennifer reaches 130 percent of her quota, her commission rate drops down to 8%.

Direct Credit

The credit is assigned to a sales representative or payee depending on any behavior, ranging from sales to meeting quotas.

Dispute resolution

It refers to a variety of techniques that can be used to address or settle issues including commission cutbacks, commission splits, confusing language in contracts or commission paperwork, and so on. Negotiation, mediation, and arbitration are three regularly utilized techniques of settling disputes without going to court.

Draw

Funds that a sales representative can borrow from the company in exchange for future commissions. Draws might be “recoverable” (the salesperson must repay the corporation with future commissions) or “non-recoverable” (no need to pay it back). Draws are commonly utilized by new reps to bridge the gap between when they start working and when they begin getting commissions on sales.

Executive Compensation

Any portion of a company’s incentive and compensation schemes for senior management. Long-term or yearly incentives, deferred remuneration, benchmarking versus competitors, and even retention programs are examples of these.

Gate

It is a qualifying component of an incentive compensation or commissions scheme that, when satisfied, allows for the payment of another component. Achieving a specific percentage of a quota, for example, might be a stepping stone to a sales incentive paid when a salesperson sells x or more units of a product.

Guaranteed pay  

A minimum amount is guaranteed to be paid to a payee or salesperson, which a company may or may not reduce from future commission payments.

Hierarchy

It is a system of ranking inside an organization based on skill level, seniority, and commission paid (occasionally Multiple Hierarchies). Within a single organization, many hierarchies may exist, resulting in remuneration at multiple levels of the reporting chain.

Within a sales organization, for example, sales team leaders may report to a branch manager, who may then report to the regional sales manager, and so on.

A person higher in the hierarchy may get a percentage commission on money generated by someone lower in the hierarchy (known as a rollup).

Company hierarchies in software systems prevent specific personnel from accessing the system.

Hierarchies can also reflect relationships between two or more things, such as product categories and subcategories, customers (United States/Southeast Region/customers), and so on.

Incentive Compensation Management (ICM)

ICM, or Incentive Compensation Management, refers to software that assists Sales Compensation Administrators in automating processes such as performing computations and creating reports, with the added benefit of avoiding mistakes associated with spreadsheets.

Incentive Management

Sales incentives are prizes and bonuses given to salespeople in exchange for completing specified targets, often selling products or services, to motivate additional sales.

Individual Incentive

Individual incentive plans are based on meeting performance requirements, and they are often used when employees have influence over results, are monitored honestly, and foster healthy competition.

Indirect Plan

A sort of sales commission plan in which payees are compensated for sales that they did not close themselves.

Kicker (also known as an accelerator)

A higher commission rate raises a representative’s compensation in comparison to what she would have received on her standard commission rate. Kickers are used to recognizing and rewarding exceptional achievement. They are often triggered if a salesperson has met his or her quota.

• For example, if Jennifer meets her quota of $100,000, she would earn $10,000, therefore her basic commission rate is 10%. Jennifer’s commission rate increases to 12 percent after she meets the quota, providing additional incentive to sustain her excellent performance.

Key Performance Indicators (KPI)

Key Performance Indicators (KPIs) are high-level, quantitative metrics that assist a corporate organization track its progress toward bigger goals, such as organizational initiatives. KPIs differ depending on the company’s goal.

KPIs for growth, for example, maybe revenue and market share, whereas KPIs for better profitability could be net margin and cost of sale.

Line of Business (LOB)

A line of business refers to sectors within a company that may be distinguished by the products and services offered, the size of the customer, the customer’s expectations, the distribution channel, and the brand.

Long Term Incentive

Any incentive in which the amount is determined by the number of years of performance.

Management by Objectives (MBO)

Management by Objectives is a technique that allows managers and team members to collaborate to develop shared performance targets.

On-Demand

Anything on-demand refers to software as a service that requires little to no installation and provides value instantaneously over the web.

On-Premise

Traditional software applications or programs must be installed on a device or hardware within a business’s physical location.

On-Target Commissions (OTC)

On-Target Commissions (sometimes abbreviated as OTE) On-Target Earnings) is the amount paid to a payee if all of their objectives are met.

On-Target Earnings (OTE)

On-Target Earnings (or simply Target Earnings) is the amount paid to a payee if all of their objectives are met. A salesperson’s compensation earnings are made up of basic pay as well as variable components of a compensation plan such as bonuses and commission.

Override

Commission on sales Override is a type of indirect payment, similar to roll-up, in which an employee receives a part of the proceeds from a sale completed by another employee.

A product manager, for example, may earn a 2.5 percent override on items sold by sales representatives even though the reps do not work for them.

Pain Point

A pain point is a specific problem (such as a product or service) that annoys prospects while they are in the sales funnel.

Customers may encounter issues with online research, website navigation, product cost and availability, checkout, multi-channel purchasing, tracking, shipping, and so on.

Pay Mix

Pay Mix The percentage of a salesperson’s total remuneration that is made up of salary and on-target commission is referred to as the pay mix. It is the ratio of basic salary to incentive pay.

A 70/30 pay mix, for example, indicates that fixed base salary accounts for 70% of total on-target earnings, and variable commission accounts for 30% of total on-target earnings.

Payee

Individuals or individual entities whose income is changeable dependent on their performance as specified by the Incentive Compensation Management system are referred to as payees or participants.

Plan

Sales incentive programs are made up of numerous components, such as commission rates, regions, quotas, gates, durations, and so on, to determine how much payees are compensated.

Plan communication and acceptance

A communication strategy is a road map created to present stakeholders with a clear, precise message including information about a recently introduced product or service. It specifies who should get certain information, when that information should be supplied, and which communication channels will be utilized to do it.

An acceptance plan is a contract between a client and management that describes the activities and criteria that must be satisfied for the customer to provide final approval when the project is completed.

Plan design and Modelling

Compensation plan design refers to the process of creating a plan that includes components that add up to a sales representative’s base pay, commissions, incentives, and so on while aligning them with the company’s goals and financial objectives.

Design of a Plan Modeling tests several plan design choices to evaluate how different levels of sales outcomes affect the overall commission budget and how this affects plan members.

Position

The position of a person in an organizational structure or hierarchy is referred to as his or her position. It specifies the extent of their tasks inside a company.

Regional sales manager, sales manager, inside sales representative, outside sales representative, sales assistant, sales engineer, and more roles are examples.

Premium

An extra payment or a quantity of money added to an employee’s regular pay rate (e.g., overtime, double-time for holidays, etc.). This might also refer to the amount to be paid for an insurance contract in insurance language (e.g., a life insurance premium).

Production Run

A Production Run is a computation used to settle payment amounts for the current pay period.

Prorate

When the payout part of an incentive is adjusted based on eligibility conditions such as length of service or probationary periods.

Qualified Lead

A sales qualified lead is a prospective customer who has been researched and vetted according to an organization’s lead qualification criteria — first by the marketing department and then by the sales team — and has been deemed ready for the next stage in the sales process, i.e. they are ready to be pursued by the sales team for conversion into a full-fledged customer.

Quota  

Quota, also known as the goal, aim, performance target, or target, is the amount that a salesperson must sell to receive a commission for a specific period (month, quarter, or year). It can be stated in terms of absolute numbers, percentages, or the number of products or services sold or recovered through future payments.

Recurring Revenue  

Recurring revenue in sales, which is common in the SaaS (Software as a Service) business subscription model, refers to payments made at regular intervals, such as ARR (Annual Recurring Revenue), QRR (Quarterly Recurring Revenue), and MRR (Monthly Recurring Revenue) (Monthly Recurring Revenue).

Retroactive

A retroactive input or choice is one made today that must be effective as of a date that has already passed. As a result, back payments or other modifications to earlier payments may be required.

Roll-Up

A rollup is a sales commission that is rolled from one payee to another based on the two’s organizational reporting connection. For example, if a salesperson receives credit for a transaction and reports to a manager who also receives credit.

Sales (Incentive) Compensation

The amount provided to sales employees (e.g., sales representatives, sales management, and sales support) in return for selling a specified quantity of items or services is known as sales (incentive) compensation. It is not guaranteed or set in the same way that a basic wage is. It is instead paid on top of it.

The majority of sales compensation plans include an “at-risk” component depending on performance. Also known as incentive pay, variable pay, at-risk pay, and pay-for-performance.

Sales Commission

Sales commission is a sort of variable pay that is given to salespeople in exchange for completing certain sales goals.

Sales Commission Metrics

Sales commission metrics are described as an organization’s Key Performance Indicators (KPIs) for measuring a salesperson’s performance against goals and objectives.

Sales commission plans

Sales commission plans include all aspects of a sales commission, including regulations, qualifying requirements, a base wage, and variable commission compensation.

Sales Compensation

1. The amount is given to sales professionals (such as sales representatives, sales management, and sales support) in return for sales results.

2. The specific collection of operations that comprise the realm of incentive compensation for sales staff, which includes formulating plans, managing rewards, and reporting to management.

Sales Incentive Plans

Sales compensation plans explain and include the components of a salesperson’s remuneration for performance, which are often made up of basic pay, commission, and extra benefits, incentives, or bonuses.

Salesforce Automation (SFA)  

Refers to the automation of duties connected to sales and sales operations.

Sales goals

Sales goals are objectives that are defined for a salesperson or a sales team.

Examples of common sales goals include growing revenue, improving client retention by a particular percentage, optimizing sales processes, increasing the number of customers, increasing sales representative productivity, and minimizing time wasted.

Sales Organization

The company’s selling unit is the sales organization. It examines the company’s sales requirements and creates them accordingly. The sales organization’s principal duty is to sell and distribute goods and services.

Other functions include recruiting and training employees, equipping the sales force, conducting market research, deciding on the brand and trademarks for the products, forecasting sales trends, managing sales budgeting, and developing policies related to channels of distribution, terms, and conditions of sale, product prices, trade, and cash discounts, conditions regarding the return of goods, the period of credit, the mode of payment, and so on.

Sales Performance Incentive Fund (SPIF)

A SPIF, or Sales Performance Incentive Fund, is an additional incentive to payees that are intended to promote specified behaviors for a limited period. This is common in contests where a sales manager may employ a SPIF to create an additional incentive for salespeople to sell aggressively until the conclusion of a quarter. It should be noted that, as with many terminologies in the realm of sales commissions, the actual words that comprise this acronym are widely debated. This may alternatively be referred to as a “Special Product Incentive Fund” or a “Special Performance Incentive Fund.” We’re not sure what the last “F” stands for when it’s spelled “SPIFF.”

Example: Catherine planned a dramatic conclusion with only four days remaining in the month. As a result, she announced a $500 SPIF for each sale until the end of the month.

Sales Performance Management(SPM)

It is concerned with the competencies required to keep the sales organization’s performance going smoothly. It aids in the planning, administration, analysis, and improvement of the performance of sales organizations. SPM integrates sales emphasis with both sales strategy and company goals.

• Plan design and modeling

• Quota and territory management  

• Plan communication and acceptance

• Compensation administration and reporting

• Incentive Compensation Management

• Dispute resolution

• Analytics

Sales Quota

Quota are sales objectives that salespeople must meet in a specific time frame to be eligible for variable compensation.

Sales Representatives  

Sales representatives work directly for the firm and serve as a liaison between the company and its clients. They often have exceptional communication, public speaking, and negotiation abilities, which enable them to grasp what the customer wants, build trust with the consumer, and display subject matter commands. They must guarantee that all clients receive the consumers and services they requested, as well as pitch future customers.

Sales Target

Sales Targets are goals for sales departments, teams, and individuals. Quotas and targets are used interchangeably. Typically, “Target” is used in APAC and EMEA, whereas “Quotas” is used in the US. Typically, targets and quotas are set for a specified period (aka period).

Sales Teams

A sales team is a group of employees that are responsible for selling a company’s products, subscriptions, and services to customers. It not only creates income but also has a significant influence on brand image, customer retention, long-term customer relationships, and so on.

Service Level Agreement  (SLA)

Service Level Agreements (SLAs) from software providers are assurances offered, such as an SLA to have an SPM with high availability; a 99.9% uptime.

Split

Split The amount of incentive payments and expenditures that are shared between two or more employees is referred to as the split.

Split sales commission agreements

Split sales commission agreements divide the commission earned on a sale into shares to compensate all salespeople for their efforts. Split sales commissions can be allocated evenly or customized to each payee.

Targeted Incentive Compensation

The entire amount of variable compensation earned by a sales representative if she meets her target performance is referred to as target incentive compensation (i.e. she hits quota). It excludes the base wage. When you combine target incentive compensation with base salary, you receive on-target earnings.

Term

It refers to the contract’s time frame. When a contract is ended early, it is subject to a charge or penalties.

Territory

Territories are groups of prospects and customers that are assigned to certain salespeople or teams to sell products or services. Each team is in charge of its own region and is commissioned appropriately.

Threshold

The threshold is the lowest level of performance that a salesperson must accomplish to receive an incentive payment.

Tiered Commission

The milestones put into an offer are referred to as a tiered commission. Here’s how it works: a basic commission is defined, along with its kind and length, and then other gradually larger commissions are piled on top of it to drive salespeople to sell more and earn more.

For example, the salesman earns a 2% commission on sales of up to $30,000. The salesman earns a 2.5 percent fee on sales between $30,001 and $60,000.

Top Performers

A company’s Top Performers are the sales reps who accomplish better win rates than others and contribute to the improvement of sales development procedures.

Total rewards

Total Rewards also known as total compensation, encompass all components of a payee’s earnings, such as long-term incentives, recognition and reward programs, perks, training, and so on.

True-up (aka Catch up)

True- Up is a payment adjustment procedure used to match or reconcile disparities between two amounts. The correction takes place at a predetermined true-up frequency. After all other payment computations have been performed, true-up adjustments are normally provided.

Variable Pay  

Variable pay is the amount of sales remuneration dependent on the payee’s degree of achievement or performance. It is also known as “pay-for-performance” or “at-risk” pay. When a payee does a bit better than normal, his/her compensation rises; when a payee underperforms, his/her pay falls.

Workflow

Workflows, as defined by Canidium, are automated business processes. Workflows inside SPM/ICM can contain procedures such as new sales rep onboarding, sales plan acceptance, dispute settlement, and so on. Workflows can be simple or complicated, depending on the needs of the organization.

[quotacal]

The Sales Commission Dictionary - Unomok

This lexicon is based on our years of experience in working with clients from a variety of industries to compute millions of Dollars in Commissions. We attempted to provide credit to such sources whenever possible. If you believe we are incorrect about a term or have failed to give credit to the creator of a definition, please contact us and we will rectify the record. We hope you like this vocabulary and find it useful.

Dictionary of Sales Commission Terms

Before you start reading further, we must inform you that the definitions mentioned here are written to the best of our judgment and may be wrong based on the context, region, and industry.

Accelerator

A higher commission rate raises a representative’s compensation in comparison to what she would have received on her standard commission rate. Accelerators are used to recognize and reward exceptional performance. They usually kick in once a salesperson has met his or her quota.

Example: Jennifer will earn $10,000 if she meets her quota of $100,000, implying that her basic commission rate is 10%. When Jennifer meets her quota, her commission rate increases to 12 percent as an added incentive to keep up her excellent performance.

Also known as: ramped rate, kicker

Achievement

A measure of a sales representative’s performance about her quota. Actual sales performance is divided by quota to determine achievement as a percentage.

• Example Sarah sells $60,000 against a quota of $80,000. As a result, her success rate is 75%.

• Also known as accomplishment

Active User

Any user who interacts with a business over a set length of time is considered an “active” user.

Agent

A sales agent is a self-employed salesman who is recruited by one or more businesses to market their products or services and enables the signing of sales contracts between the business and its consumers.

Analytics

Analytics, often known as sales analytics, refers to the tools and methods used to gather, monitor, manage, and analyze sales data. It assists the sales team in making educated judgments regarding prospects and customers, product lines, market potential, and sales team performance.

Annual Bonus

An annual bonus is an amount of money provided to workers each year in addition to their base wage. It may or may not be connected to an employee’s performance. Some organizations, for example, provide a percentage of the overall salary as a bonus (which changes depending on the employee’s performance), whilst others award a fixed bonus each year.

Annual wage adjustment

An annual pay adjustment is a yearly increase or decrease in salaries based on a certain plan formula.

ASC 606 Standard

A revenue recognition standard, often known as an accounting standard. This standard specifies that revenue should be recognized when the contact between a customer and a firm is satisfied, i.e. when a company fulfills its performance duty by delivering a promised item or service to a client.

At-risk pay

Performance-based pay is a type of pay that is dependent on how well you perform. It is not guaranteed pay in the way that a salary would be. The majority of sales compensation plans include an “at-risk” component depending on performance. This risk component is paid in addition to the base salary.

• Other names for incentive compensation, variable compensation, and pay-for-performance.

Attainment

A measure of a sales representative’s performance about his quota. Attainment is measured as a percentage by dividing actual sales performance by quota.

• For instance, Rico sells $60,000 against a quota of $80,000. As a result, his achievement rate is 75%.

• Also known as accomplishment

Base Salary/Base Salary

Base pay, often known as base salary, is the minimum payment a person receives based on their job posting and credentials. The sum is determined by Human Resources rules and is exclusive of any other kinds of remuneration, perks, or incentives.

Best Practices

Best practices are tried-and-true processes or approaches that provide outcomes that are superior to those obtained by other means and are sometimes referred to as the standard. These practices are followed by salespeople and sales managers to achieve their aims and objectives in the best way possible.

Bonus

A sales bonus is an incentive payment that is often triggered by a yes/no decision (e.g., did the sales rep achieve a threshold? If so, pay a bonus). This is not the same as a commission, which is paid progressively when greater levels of performance are attained (i.e. a rep may make a commission on each deal). It’s crucial to remember that not all sales compensation experts use the same terminology. Some sales compensation professionals use the terms “bonus” and “commission” interchangeably.

Cap

A cap is an upper limit or limitation set on the amount of money that may be spent. It is the highest financial remuneration an employee may earn in a specific period in sales.

Channel

A sales channel is a means used to distribute or sell items or services to the market. A company’s products or services might be distributed or sold through direct (website, salesforce, etc.) or indirect (brokers/agents, partners, etc.) channels.

Clawback

A clawback occurs when a company reverses or recovers a previously provided reward. Clawbacks typically occur when a consumer returns a product or cancels a contract on which a sales representative has been paid. They can, however, develop merely because there were flaws in the initial computation (e.g., the sales amount was entered incorrectly).

Coaching

Coaching, sometimes known as sales coaching, is an important component of performance management. It is the process of increasing a team’s or an individual’s performance by inspiring, training, and assisting salespeople to reach their goals. The ultimate objective is to improve KPIs (key performance indicators) like revenue growth and customer satisfaction.

Commission per sale

The most basic of all sales compensation plans. This sort of plan pays a basic percentage of each transaction, so a sales representative shares a piece of the money generated for the firm. These plans, unlike On-Target Commission programs, do not have a quota attached to them. These are often known as flat commission programs or unit rate arrangements.

•As an example, residential real estate brokers who get paid 3% of each house sale are on commission-per-sale arrangements.

[jobsinchicago911]

Accounting Manager

At Civis, we take a science-first approach to solving problems. With a blend of proprietary technology and statistical advisory services, we help public and private sector organizations find, understand and connect with the people they care about, so they can stop guessing and start using mathematical proof to guide decisions. We know others use “data science” and “analytics” as buzzwords, but at Civis we don’t stand for fluff, and we will always deliver scalable products and technologies — not PowerPoints — to drive your business forward. Learn more about Civis at www.civisanalytics.com .

Our mission

Our mission is to bring objective, data-driven truth to organizational decision-making – all the way from the boardroom to the world’s largest social causes.

Due to the uncertainty of COVID-19, all Civis offices are closed and all employees are remote for the foreseeable future. This is being closely monitored as things change and it’s likely our offices will reopen. Because of this uncertainty, we want to ensure candidates for this role are open to potentially relocating to one of our offices in the future.

About our team : 

The Finance, Accounting, and Revenue Operations team (affectionately called Team Money), is a part of the larger Operations team at Civis. The Operations team also includes our People Operations and Legal teams. As an Operations team, our core values include respect, humanity, ownership, and humility. We strive to bring these values to work every day, with the aim of making Civis a great place to work for everyone. 

What we are looking for

As a member of our accounting team you will help drive our day-to-day accounting, financial, and reporting processes. Key duties include leading the monthly close process, overseeing AR and AP processes, managing annual audits, and managing staff accountants. We are a lean team which allows for a lot of project ownership, collaboration, and the ability to impact the business. We’re looking for analytical thinkers with creative ideas who can go beyond the numbers and think critically about the business. 

Responsibilities

Manage month-end close, reconciliation, and reporting processes

Manage and mentor a small team of accountants

Research technical accounting issues, including the implementation of new standards and internal policies

Lead the annual audit process

Oversee day to day accounting operations, including bookkeeping and AR/AP processes 

Maintain accounting processes and policies, while working to continually improve and streamline our procedures

Support ad hoc requests from our finance team

Preferred Qualifications

8+ years of experience working in an accounting role, preferably with a SaaS product

2+ years leading a small team

CPA certification required

Proven knowledge of accounting principles, practices, standards, laws, and regulations, including experience with revenue recognition under ASC 606

Experience in Netsuite is a plus

Advanced knowledge of Microsoft or Google Suite, especially with spreadsheets

High attention to detail and accuracy

Strong communication and interpersonal skills, with the ability to build relationships at all levels

Why join our team?

The opportunity to be part of a growing tech startup focused on solving interesting and meaningful problems, invested in internal promotion, and committed to fostering a diverse, equal and inclusive workplace. 

Competitive benefits, including unlimited PTO, 401K match with immediate vesting, health, dental, and vision benefits, fully paid parental leave, breastfeeding support including breastmilk shipping services for traveling moms, commuter benefits, wellness initiatives including weekly group meditations, monthly on-site massage therapy, and pet insurance.

To support employees in our now fully remote work environment , we also have expanded our virtual journal and book clubs, Donut Pals (organized virtual coffee meet-ups), Lightning Talks (5-minute presentations on anything you’d like), Lunch-and-Learns, and HR Open Discussions (bi-weekly meet-up where we discuss ideas and topics of the day in a casual format). We are also able to support and accommodate flexible work from home schedules to help employees juggle responsibilities at home.

Civis Analytics embraces the individuality of our employees and we celebrate each other’s differences. Our products, services, and culture benefit from and thrive on the unique perspectives brought by each person in our community. We’re proud to be an equal opportunity workplace, and we are committed to equal employment opportunity regardless of race, age, sex, color, ancestry, religion, national origin, sexual orientation, gender identity, citizenship, marital status, disability, or Veteran status. If you have a disability or special need that requires accommodation, please contact internalrecruiting@civisanalytics.com

In compliance with federal law, all persons hired will be required to verify identity and eligibility to work in the United States.

Do you have experience working for a Public Accounting Firm?  * —

Will you now or in the future require Civis Analytics to commence (“sponsor”) an immigration case in order to employ you (for example, H-1B or other employment-based immigration case)? This is sometimes called “sponsorship” for an employment-based visa status.  * —

If the answer to above question is “yes,” please specify the type of visa you currently have and its expiration date.  *

U.S. Equal Opportunity Employment Information (Completion is voluntary)

Individuals seeking employment at Civis Analytics are considered without regards to race, color, religion, national origin, age, sex, marital status, ancestry, physical or mental disability, veteran status, gender identity, or sexual orientation. You are being given the opportunity to provide the following information in order to help us comply with federal and state Equal Employment Opportunity/Affirmative Action record keeping, reporting, and other legal requirements.

Completion of the form is entirely voluntary. Whatever your decision, it will not be considered in the hiring process or thereafter. Any information that you do provide will be recorded and maintained in a confidential file.

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A “disabled veteran” is one of the following: a veteran of the U.S. military, ground, naval or air service who is entitled to compensation (or who but for the receipt of military retired pay would be entitled to compensation) under laws administered by the Secretary of Veterans Affairs; or a person who was discharged or released from active duty because of a service-connected disability.

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Veteran Status Please select

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Voluntary Self-Identification of Disability

Why are you being asked to complete this form?

We are a federal contractor or subcontractor required by law to provide equal employment opportunity to qualified people with disabilities. We are also required to measure our progress toward having at least 7% of our workforce be individuals with disabilities. To do this, we must ask applicants and employees if they have a disability or have ever had a disability. Because a person may become disabled at any time, we ask all of our employees to update their information at least every five years.

Identifying yourself as an individual with a disability is voluntary, and we hope that you will choose to do so. Your answer will be maintained confidentially and not be seen by selecting officials or anyone else involved in making personnel decisions. Completing the form will not negatively impact you in any way, regardless of whether you have self-identified in the past. For more information about this form or the equal employment obligations of federal contractors under Section 503 of the Rehabilitation Act, visit the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) website at www.dol.gov/ofccp .

How do you know if you have a disability?

You are considered to have a disability if you have a physical or mental impairment or medical condition that substantially limits a major life activity, or if you have a history or record of such an impairment or medical condition.

Disabilities include, but are not limited to:

Autism

Autoimmune disorder, for example, lupus, fibromyalgia, rheumatoid arthritis, or HIV/AIDS

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Cancer

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1 Section 503 of the Rehabilitation Act of 1973, as amended. For more information about this form or the equal employment obligations of Federal contractors, visit the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) website at www.dol.gov/ofccp .

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The post Accounting Manager first appeared on Jobs in Chicago. from Jobs in Chicago https://ift.tt/30xTWo3 via IFTTT

[rightrev-revenuerecognition]

Navigating the intricate landscape of revenue recognition, even for seasoned accountants, can be akin to traversing the Wild Wild West of financial reporting requirements. The complexity of this process, with its myriad moving parts, can be overwhelming. Fortunately, ASC 606 Revenue Recognition and its structured five-step framework serve as a guiding beacon, rescuing accountants from the ambiguity often associated with revenue recognition.

Despite the standardization ASC 606 offers, complexities persist. Questions arise: When precisely should revenue be recognized? How should it be categorized? Did a salesperson extend a discount, and how is that accounted for?

This article endeavors to shed light on real-world ASC 606 revenue recognition examples, offering insights into how revenue should be recognized across diverse industries, from SaaS to telecommunications. It aims to demystify the intricacies of each step in the process, providing practical advice.

Understanding ASC 606 Revenue Recognition:

What Is ASC 606? ASC 606, issued by the Financial Accounting Standards Board (FASB), stands as a cornerstone in generally accepted accounting principles (GAAP). It dictates how businesses across all industries report recognized revenue. The primary goal is to standardize and enhance the consistency of revenue recognition practices, replacing the prior patchwork of industry-specific guidance.

According to ASC 606, revenue must be recognized when goods or services are delivered, aligning recognition with the terms of delivery for performance obligations. This includes activations, set-ups, consumption, and shipping, whether at a specific point in time or over the contract term.

The broader impact of ASC 606 on financial transparency and comparability is substantial. By mandating detailed disclosure of information and performance obligations in financial statements, it facilitates meaningful comparisons across entities and industries, fostering confidence in financial reporting.

The Five-Step Model for Revenue Recognition: ASC 606 provides a structured five-step framework for recognizing revenue:

Identify the Contract With a Customer:

Determine if a contract exists, outlining identifiable rights and payment terms.

Identify the Performance Obligations in the Contract:

Pinpoint distinct goods and services promised to the customer within the contract.

Determine the Transaction Price:

Establish the total amount of consideration expected in exchange for fulfilling performance obligations.

Allocate the Transaction Price to Performance Obligations:

Distribute the transaction price among performance obligations based on standalone selling prices.

Recognize Revenue as Performance Obligations Are Satisfied:

Recognize revenue when goods or services are transferred, occurring over time or at a specific point.

Adhering to this five-step model ensures businesses recognize revenue in accordance with ASC 606 guidelines, fostering financial stability and compliance.

When Is Revenue Recognized? Determining when to recognize revenue involves assessing specific transaction circumstances. Common scenarios include:

Ratably (Over Time):

Recognizing revenue over time as customers benefit from the seller's ongoing performance, common for subscription services or long-term projects.

Point-in-Time:

Recognizing revenue when control of goods or services transfers to the customer, often upon delivery of a product or completion of a service.

Upon Bookings:

Recognizing revenue when a sale is booked, signifying the point when sales agreements or contracts are signed.

Upon Billings:

Recognizing revenue upon billing, aligning recognition with invoicing customers for agreed-upon amounts.

Milestones, Delivery, or Other Events:

Depending on contract terms, recognizing revenue when specific events like milestones or deliverables occur.

It's vital to align sales and accounting teams to define contract terms accurately, ensuring revenue recognition mirrors the actual transfer of control.

ASC 606 Revenue Recognition Examples:

Traditional Software Companies:

Recognizing revenue for license-based software, ensuring accurate allocation and timing based on performance obligations.

SaaS Companies:

Recognizing revenue ratably over multi-year contracts, adjusting for modifications, and accounting for downgrades or cancellations.

Construction Companies:

Recognizing revenue for construction projects over time, addressing over/underbillings, and accounting for modifications.

Service Providers:

Applying point-in-time, completed milestones, and percentage-of-completion methods for recognizing revenue in service contracts.

Telecommunications Companies:

Recognizing revenue based on usage in telecommunications, accounting for bundled services, and applying output or input methods for progress.

Applying ASC 606 Principles:

Establish clear contract terms, ensuring alignment between sales and accounting teams.

Exercise diligence in documenting contract terms, performance obligations, and variable considerations.

Continuously monitor and recognize revenue based on progress or usage, avoiding premature recognition.

Address complexities such as modifications, over/underbillings, and service usage adjustments.

Maintain consistency, accuracy, and transparency to avoid financial discrepancies and support informed decision-making.

Automating ASC 606 Compliance: Automating revenue recognition with tools like RightRev streamlines the process, eliminating manual errors and ensuring ASC 606 compliance. The automation helps finance teams navigate complexities, fostering accuracy and efficiency in revenue recognition.

In conclusion, navigating ASC 606 requires a deep understanding of its principles and diligent application across diverse industries. Adherence to the structured framework and adoption of automation tools contribute to accurate revenue recognition, compliance, and financial transparency.

[saxllp]

CFO Focus: Revenue Recognition on July 18

Revenue Recognition: Upcoming FASB Changes You Must Prepare For

The Financial Accounting Standards Board (FASB) issued their final standard on reporting revenue which becomes effective January 1, 2019 for private companies. This new standard outlines a specific model for companies to follow with regards to accounting for revenue arising from contracts with customers, and organizations need to start adapting to these changes as soon as possible.

Join us for the next session of our CFO Focus on July 18 as Debra Karacsony, Director of Quality Control at Sax LLP, explains the key changes to revenue recognition and what is to be expected from your organization in complying with these new standards.

Key areas of discussion will include:

Overview of the Five Step Model – under FASB ASC 606

Examples of Implementation

Steps to Evaluate the Accounting Impact on an Organization

Wednesday, July 18, 2018 | 8:00 AM – 10:30AM

Offices of Sax LLP 855 Valley Road, Fl. 3 Clifton, NJ 07013

Debra Karacsony is Director of Quality Control at Sax and in this capacity, she monitors the firm’s compliance with professional standards in accounting, auditing and quality control. Debra is involved in the development of the firm’s training curriculum in the areas of accounting and auditing and conducts seminars on these topics frequently. Her experience also includes performing peer reviews of corporate and governmental internal audit departments. Debra is a Certified Public Accountant in New Jersey.  She earned a BBA degree in Accounting from Pace University in New York.

For more information or to register, please contact Bianca Madrigal at bmadrigal@saxllp.com.

from SAX https://www.saxllp.com/cfo-focus-revenue-recognition-on-july-18/

[brianlichtig]

IDG Contributor Network: What #GDPRjokes tell us about the coming regulations

GDPR humor

The hashtag #GDPRjokes is currently trending on Twitter. Here is a flavor: “Knock knock. Who's there? John. The following question is optional and is not a precondition to being let in. John who?”; “Doctor, Doctor!” “Why have you captured my professional title when it isn’t relevant to your stated use of my data?” It seems there is no traditional joke template that cannot be re-written to take account of the imminent General Data Protection Regulations which come into force in the EU later this month: “My dog has no nose - How does he smell? - I don’t know, he hasn’t opted-in to me contacting him.”

The jokes are mostly pretty terrible - but they do bring a little lightness to what can be a rather dull topic. Most GDPR seminars could use a little humor. But they are also illuminating - not just because they refer to some aspects of the rules - and some common misconceptions - but because they are there at all. Regulatory changes happen all the time - new standards in revenue recognition for example, or other accounting standards. But very few people ever hear of them. You are not likely to go to a party and be asked about the ramifications of SOC 1, for example, and there are no jokes that I know of about ASC 606. But GDPR has escaped from the world of regulatory compliance to become a subject of general interest - as well as the jokes, there are articles about it in mainstream newspapers and it is a subject for discussion on TV and radio.

To read this article in full, please click here

from CIO https://www.cio.com/article/3269499/privacy/what-gdprjokes-tell-us-about-the-coming-regulations.html#tk.rss_all Baltimore IT Support

[itviconsultants]

IDG Contributor Network: What #GDPRjokes tell us about the coming regulations

GDPR humor The hashtag #GDPRjokes is currently trending on Twitter. Here is a flavor: “Knock knock. Who's there? John. The following question is optional and is not a precondition to being let in. John who?”; “Doctor, Doctor!” “Why have you captured my professional title when it isn’t relevant to your stated use of my data?” It seems there is no traditional joke template that cannot be re-written to take account of the imminent General Data Protection Regulations which come into force in the EU later this month: “My dog has no nose - How does he smell? - I don’t know, he hasn’t opted-in to me contacting him.” The jokes are mostly pretty terrible - but they do bring a little lightness to what can be a rather dull topic. Most GDPR seminars could use a little humor. But they are also illuminating - not just because they refer to some aspects of the rules - and some common misconceptions - but because they are there at all. Regulatory changes happen all the time - new standards in revenue recognition for example, or other accounting standards. But very few people ever hear of them. You are not likely to go to a party and be asked about the ramifications of SOC 1, for example, and there are no jokes that I know of about ASC 606. But GDPR has escaped from the world of regulatory compliance to become a subject of general interest - as well as the jokes, there are articles about it in mainstream newspapers and it is a subject for discussion on TV and radio. To read this article in full, please click here http://dlvr.it/QRV81f #CIO #ITStrategy

[calcbench]

Recasting Revenue: Another Example

So defense contractor Northrop Grumman filed its 2017 Form 10-K earlier this week, and Calcbench was rooting around in the financial disclosures to see whether we could find any cool stuff.

Sure enough, at the bottom of its Summary of Significant Accounting Policies, we found what Northrop had to say about the new accounting standard for revenue recognition — including a forecast of what Northrop’s 2017 revenues would have looked like, had the company already adopted the new standard.

First, a few caveats. The new standard (ASC 606, Contracts With Customers) requires companies to define business transactions as a series of performance obligations they provide to a customer. The company can then only recognize revenue as it fulfills each obligation.

For many companies, that new approach won’t mean much. For some (looking at you, software sector), it will mean a lot, to the point that companies might have to report a material change in the timing or nature of their revenue patterns.

So what did Northrop Grumman have to say?

First, the company adopted the new standard as of Jan. 1, 2018. So its most recent Form 10-K, for the fiscal year ending Dec. 31, 2017, still includes financials on the income statement reported according to the old standard. Mixed results on that front: total revenue up 8.8 percent to $16.04 billion, but net earnings down 8 percent $2.02 billion.

About the new revenue standard, Northrop said in its Summary of Significant Accounting Policies that it does not expect the new standard to have a material effect on revenue numbers. That said, the company will be adopting ASC 606 using the “full retrospective method,” where it recasts previous years’ revenue numbers according to the new standard. And Northrop did find a few changes:

Under the full retrospective method, we principally recognized the cumulative effect of adoption as an increase in unbilled accounts receivable, a reduction in inventoried costs, an increase in advance payments and amounts in excess of costs incurred and a net increase in retained earnings as of January 1, 2016.

But wait, it gets better! Northop even included a table of the revised revenue numbers. Take a look:

Financial analysts will see more and more of these disclosures in coming weeks, and then throughout 2018 as all companies eventually implement ASC 606. Northrop is one example; we’ll post about other interesting ones as they come to light.

[salesmotivation]

The Sales Commission Dictionary

This lexicon is based on our years of experience in working with clients from a variety of industries to compute millions of Dollars in Commissions. We attempted to provide credit to such sources whenever possible. If you believe we are incorrect about a term or have failed to give credit to the creator of a definition, please contact us and we will rectify the record. We hope you like this vocabulary and find it useful.

Dictionary of Sales Commission Terms

Before you start reading further, we must inform you that the definitions mentioned here are written to the best of our judgment and may be wrong based on the context, region, and industry.

Accelerator

A higher commission rate raises a representative’s compensation in comparison to what she would have received on her standard commission rate. Accelerators are used to recognize and reward exceptional performance. They usually kick in once a salesperson has met his or her quota.

Example: Jennifer will earn $10,000 if she meets her quota of $100,000, implying that her basic commission rate is 10%. When Jennifer meets her quota, her commission rate increases to 12 percent as an added incentive to keep up her excellent performance.

Also known as: ramped rate, kicker

Achievement

A measure of a sales representative’s performance about her quota. Actual sales performance is divided by quota to determine achievement as a percentage.

• Example Sarah sells $60,000 against a quota of $80,000. As a result, her success rate is 75%.

• Also known as accomplishment

Active User

Any user who interacts with a business over a set length of time is considered an “active” user.

Agent

A sales agent is a self-employed salesman who is recruited by one or more businesses to market their products or services and enables the signing of sales contracts between the business and its consumers.

Analytics

Analytics, often known as sales analytics, refers to the tools and methods used to gather, monitor, manage, and analyze sales data. It assists the sales team in making educated judgments regarding prospects and customers, product lines, market potential, and sales team performance.

Annual Bonus

An annual bonus is an amount of money provided to workers each year in addition to their base wage. It may or may not be connected to an employee’s performance. Some organizations, for example, provide a percentage of the overall salary as a bonus (which changes depending on the employee’s performance), whilst others award a fixed bonus each year.

Annual wage adjustment

An annual pay adjustment is a yearly increase or decrease in salaries based on a certain plan formula.

ASC 606 Standard

A revenue recognition standard, often known as an accounting standard. This standard specifies that revenue should be recognized when the contact between a customer and a firm is satisfied, i.e. when a company fulfills its performance duty by delivering a promised item or service to a client.

At-risk pay

Performance-based pay is a type of pay that is dependent on how well you perform. It is not guaranteed pay in the way that a salary would be. The majority of sales compensation plans include an “at-risk” component depending on performance. This risk component is paid in addition to the base salary.

• Other names for incentive compensation, variable compensation, and pay-for-performance.

Attainment

A measure of a sales representative’s performance about his quota. Attainment is measured as a percentage by dividing actual sales performance by quota.

• For instance, Rico sells $60,000 against a quota of $80,000. As a result, his achievement rate is 75%.

• Also known as accomplishment

Base Salary/Base Salary

Base pay, often known as base salary, is the minimum payment a person receives based on their job posting and credentials. The sum is determined by Human Resources rules and is exclusive of any other kinds of remuneration, perks, or incentives.

Best Practices

Best practices are tried-and-true processes or approaches that provide outcomes that are superior to those obtained by other means and are sometimes referred to as the standard. These practices are followed by salespeople and sales managers to achieve their aims and objectives in the best way possible.

Bonus

A sales bonus is an incentive payment that is often triggered by a yes/no decision (e.g., did the sales rep achieve a threshold? If so, pay a bonus). This is not the same as a commission, which is paid progressively when greater levels of performance are attained (i.e. a rep may make a commission on each deal). It’s crucial to remember that not all sales compensation experts use the same terminology. Some sales compensation professionals use the terms “bonus” and “commission” interchangeably.

Cap

A cap is an upper limit or limitation set on the amount of money that may be spent. It is the highest financial remuneration an employee may earn in a specific period in sales.

Channel

A sales channel is a means used to distribute or sell items or services to the market. A company’s products or services might be distributed or sold through direct (website, salesforce, etc.) or indirect (brokers/agents, partners, etc.) channels.

Clawback

A Clawback occurs when a company reverses or recovers a previously provided reward. Clawback typically occur when a consumer returns a product or cancels a contract on which a sales representative has been paid. They can, however, develop merely because there were flaws in the initial computation (e.g., the sales amount was entered incorrectly).

Coaching

Coaching, sometimes known as sales coaching, is an important component of performance management. It is the process of increasing a team’s or an individual’s performance by inspiring, training, and assisting salespeople to reach their goals. The ultimate objective is to improve KPIs (key performance indicators) like revenue growth and customer satisfaction.

Commission per sale

The most basic of all sales compensation plans. This sort of plan pays a basic percentage of each transaction, so a sales representative shares a piece of the money generated for the firm. These plans, unlike On-Target Commission programs, do not have a quota attached to them. These are often known as flat commission programs or unit rate arrangements.

•As an example, residential real estate brokers who get paid 3% of each house sale are on commission-per-sale arrangements.

Commission rate  

A sales commission rate links a salesperson’s success to monetary remuneration. It is often fixed and stated as a percentage.

For example, if you establish a 20% sales commission rate and a salesperson sells $10,000 in items in a month, you must pay him/her a $2000 commission.

Commission Tracking Software  

Also known as Incentive Compensation Management Software is software that automates the process of computing sales compensation and tracking salespeople’s commissions and performance.

Commissions

Commissions are a type of remuneration. Individuals receive “variable” rewards since they are contingent on performance. Commissions are often calculated as a proportion of the sale volume, revenue, gross margin, or other criteria. Commissions are paid on top of other types of remuneration, such as salary.

Commissions Expenses

Commission expenditure is an accounting phrase that refers to an entry that is used to reflect a company’s responsibility for salesperson remuneration.

Compensation Administration

Compensation administration is a subset of human resource management that handles claim monitoring and administration, report development, revenue recognition, and communication with employees, managers, insurance carriers, medical personnel, and attorneys.

It refers to the planning, organization, and management of direct and indirect payments made to employees for the work they do.

Sales management can choose from three main pay plans: salary, commission, and combination (salary + incentive).

Compensation Management Software

Compensation Management Software (CMS) is a program used to evaluate and update compensation policies, schedule bonuses, and commission components, and suggest pay modifications.

Compensation Strategy

A compensation plan is a high-level method to align a company’s incentives, perks, salary, and other types of payment with its goals.

Configuration, Pricing, and Quotation (CPQ)

Sales personnel may use CPQ systems to create correct product or service selections, pricing, and quotations. Such systems are distinguished by their ability to respond quickly and accurately to prospects’ demands while eliminating quotation mistakes and rework.

CRM  

CRM (Customer Relationship Management) software is designed to aid a company’s interactions with customers, clients, and sales prospects as they go through the sales funnel.

Salesforce Sales Cloud, SAP, Oracle, and Microsoft Dynamics 365 are examples of such software.

Decelerator

A decelerator is the inverse of an accelerator. A decelerator is a lowered commission rate that reduces a representative’s compensation in comparison to what she would have earned with her basic commission rate. Decelerators can be used to punish poor performance (before a representative reaches quota) or to avoid excessive rewards (after a rep hits quota). Decelerators may demotivate a sales representative and should be used with caution.

Example (penalizing bad performance): Jennifer will earn $10,000 if she meets her quota of $100,000, implying that her basic commission rate is 10%. To compensate for below-average sales performance, her commission rate on all transactions up to $100,000 is only 8%.

Example (to minimize excessive payouts): When Jennifer meets her quota, her commission rate increases to 12 percent. This is a performance accelerator designed to recognize and reward exceptional performance. However, sales management has a strict budget for sales commissions and prefers to avoid large payouts. So, after Jennifer reaches 130 percent of her quota, her commission rate drops down to 8%.

Direct Credit

The credit is assigned to a sales representative or payee depending on any behavior, ranging from sales to meeting quotas.

Dispute resolution

It refers to a variety of techniques that can be used to address or settle issues including commission cutbacks, commission splits, confusing language in contracts or commission paperwork, and so on. Negotiation, mediation, and arbitration are three regularly utilized techniques of settling disputes without going to court.

Draw

Funds that a sales representative can borrow from the company in exchange for future commissions. Draws might be “recoverable” (the salesperson must repay the corporation with future commissions) or “non-recoverable” (no need to pay it back). Draws are commonly utilized by new reps to bridge the gap between when they start working and when they begin getting commissions on sales.

Executive Compensation

Any portion of a company’s incentive and compensation schemes for senior management. Long-term or yearly incentives, deferred remuneration, benchmarking versus competitors, and even retention programs are examples of these.

Gate

It is a qualifying component of an incentive compensation or commissions scheme that, when satisfied, allows for the payment of another component. Achieving a specific percentage of a quota, for example, might be a stepping stone to a sales incentive paid when a salesperson sells x or more units of a product.

Guaranteed pay  

A minimum amount is guaranteed to be paid to a payee or salesperson, which a company may or may not reduce from future commission payments.

Hierarchy

It is a system of ranking inside an organization based on skill level, seniority, and commission paid (occasionally Multiple Hierarchies). Within a single organization, many hierarchies may exist, resulting in remuneration at multiple levels of the reporting chain.

Within a sales organization, for example, sales team leaders may report to a branch manager, who may then report to the regional sales manager, and so on.

A person higher in the hierarchy may get a percentage commission on money generated by someone lower in the hierarchy (known as a rollup).

Company hierarchies in software systems prevent specific personnel from accessing the system.

Hierarchies can also reflect relationships between two or more things, such as product categories and subcategories, customers (United States/Southeast Region/customers), and so on.

Incentive Compensation Management (ICM)

ICM, or Incentive Compensation Management, refers to software that assists Sales Compensation Administrators in automating processes such as performing computations and creating reports, with the added benefit of avoiding mistakes associated with spreadsheets.

Incentive Management

Sales incentives are prizes and bonuses given to salespeople in exchange for completing specified targets, often selling products or services, to motivate additional sales.

Individual Incentive

Individual incentive plans are based on meeting performance requirements, and they are often used when employees have influence over results, are monitored honestly, and foster healthy competition.

Indirect Plan

A sort of sales commission plan in which payees are compensated for sales that they did not close themselves.

Kicker (also known as an accelerator)

A higher commission rate raises a representative’s compensation in comparison to what she would have received on her standard commission rate. Kickers are used to recognizing and rewarding exceptional achievement. They are often triggered if a salesperson has met his or her quota.

• For example, if Jennifer meets her quota of $100,000, she would earn $10,000, therefore her basic commission rate is 10%. Jennifer’s commission rate increases to 12 percent after she meets the quota, providing additional incentive to sustain her excellent performance.

Key Performance Indicators (KPI)

Key Performance Indicators (KPIs) are high-level, quantitative metrics that assist a corporate organization track its progress toward bigger goals, such as organizational initiatives. KPIs differ depending on the company’s goal.

KPIs for growth, for example, maybe revenue and market share, whereas KPIs for better profitability could be net margin and cost of sale.

Line of Business (LOB)

A line of business refers to sectors within a company that may be distinguished by the products and services offered, the size of the customer, the customer’s expectations, the distribution channel, and the brand.

Long Term Incentive

Any incentive in which the amount is determined by the number of years of performance.

Management by Objectives (MBO)

Management by Objectives is a technique that allows managers and team members to collaborate to develop shared performance targets.

On-Demand

Anything on-demand refers to software as a service that requires little to no installation and provides value instantaneously over the web.

On-Premise

Traditional software applications or programs must be installed on a device or hardware within a business’s physical location.

On-Target Commissions (OTC)

On-Target Commissions (sometimes abbreviated as OTE) On-Target Earnings) is the amount paid to a payee if all of their objectives are met.

On-Target Earnings (OTE)

On-Target Earnings (or simply Target Earnings) is the amount paid to a payee if all of their objectives are met. A salesperson’s compensation earnings are made up of basic pay as well as variable components of a compensation plan such as bonuses and commission.

Override

Commission on sales Override is a type of indirect payment, similar to roll-up, in which an employee receives a part of the proceeds from a sale completed by another employee.

A product manager, for example, may earn a 2.5 percent override on items sold by sales representatives even though the reps do not work for them.

Pain Point

A pain point is a specific problem (such as a product or service) that annoys prospects while they are in the sales funnel.

Customers may encounter issues with online research, website navigation, product cost and availability, checkout, multi-channel purchasing, tracking, shipping, and so on.

Pay Mix

Pay Mix The percentage of a salesperson’s total remuneration that is made up of salary and on-target commission is referred to as the pay mix. It is the ratio of basic salary to incentive pay.

A 70/30 pay mix, for example, indicates that fixed base salary accounts for 70% of total on-target earnings, and variable commission accounts for 30% of total on-target earnings.

Payee

Individuals or individual entities whose income is changeable dependent on their performance as specified by the Incentive Compensation Management system are referred to as payees or participants.

Plan

Sales incentive programs are made up of numerous components, such as commission rates, regions, quotas, gates, durations, and so on, to determine how much payees are compensated.

Plan communication and acceptance

A communication strategy is a road map created to present stakeholders with a clear, precise message including information about a recently introduced product or service. It specifies who should get certain information, when that information should be supplied, and which communication channels will be utilized to do it.

An acceptance plan is a contract between a client and management that describes the activities and criteria that must be satisfied for the customer to provide final approval when the project is completed.

Plan design and Modelling

Compensation plan design refers to the process of creating a plan that includes components that add up to a sales representative’s base pay, commissions, incentives, and so on while aligning them with the company’s goals and financial objectives.

Design of a Plan Modeling tests several plan design choices to evaluate how different levels of sales outcomes affect the overall commission budget and how this affects plan members.

Position

The position of a person in an organizational structure or hierarchy is referred to as his or her position. It specifies the extent of their tasks inside a company.

Regional sales manager, sales manager, inside sales representative, outside sales representative, sales assistant, sales engineer, and more roles are examples.

Premium

An extra payment or a quantity of money added to an employee’s regular pay rate (e.g., overtime, double-time for holidays, etc.). This might also refer to the amount to be paid for an insurance contract in insurance language (e.g., a life insurance premium).

Production Run

A Production Run is a computation used to settle payment amounts for the current pay period.

Prorate

When the payout part of an incentive is adjusted based on eligibility conditions such as length of service or probationary periods.

Qualified Lead

A sales qualified lead is a prospective customer who has been researched and vetted according to an organization’s lead qualification criteria — first by the marketing department and then by the sales team — and has been deemed ready for the next stage in the sales process, i.e. they are ready to be pursued by the sales team for conversion into a full-fledged customer.

Quota  

Quota, also known as the goal, aim, performance target, or target, is the amount that a salesperson must sell to receive a commission for a specific period (month, quarter, or year). It can be stated in terms of absolute numbers, percentages, or the number of products or services sold or recovered through future payments.

Recurring Revenue  

Recurring revenue in sales, which is common in the SaaS (Software as a Service) business subscription model, refers to payments made at regular intervals, such as ARR (Annual Recurring Revenue), QRR (Quarterly Recurring Revenue), and MRR (Monthly Recurring Revenue) (Monthly Recurring Revenue).

Retroactive

A retroactive input or choice is one made today that must be effective as of a date that has already passed. As a result, back payments or other modifications to earlier payments may be required.

Roll-Up

A rollup is a sales commission that is rolled from one payee to another based on the two’s organizational reporting connection. For example, if a salesperson receives credit for a transaction and reports to a manager who also receives credit.

Sales (Incentive) Compensation

The amount provided to sales employees (e.g., sales representatives, sales management, and sales support) in return for selling a specified quantity of items or services is known as sales (incentive) compensation. It is not guaranteed or set in the same way that a basic wage is. It is instead paid on top of it.

The majority of sales compensation plans include an “at-risk” component depending on performance. Also known as incentive pay, variable pay, at-risk pay, and pay-for-performance.

Sales Commission

Sales commission is a sort of variable pay that is given to salespeople in exchange for completing certain sales goals.

Sales Commission Metrics

Sales commission metrics are described as an organization’s Key Performance Indicators (KPIs) for measuring a salesperson’s performance against goals and objectives.

Sales commission plans

Sales commission plans include all aspects of a sales commission, including regulations, qualifying requirements, a base wage, and variable commission compensation.

Sales Compensation

1. The amount is given to sales professionals (such as sales representatives, sales management, and sales support) in return for sales results.

2. The specific collection of operations that comprise the realm of incentive compensation for sales staff, which includes formulating plans, managing rewards, and reporting to management.

Sales Incentive Plans

Sales compensation plans explain and include the components of a salesperson’s remuneration for performance, which are often made up of basic pay, commission, and extra benefits, incentives, or bonuses.

Salesforce Automation (SFA)  

Refers to the automation of duties connected to sales and sales operations.

Sales goals

Sales goals are objectives that are defined for a salesperson or a sales team.

Examples of common sales goals include growing revenue, improving client retention by a particular percentage, optimizing sales processes, increasing the number of customers, increasing sales representative productivity, and minimizing time wasted.

Sales Organization

The company’s selling unit is the sales organization. It examines the company’s sales requirements and creates them accordingly. The sales organization’s principal duty is to sell and distribute goods and services.

Other functions include recruiting and training employees, equipping the sales force, conducting market research, deciding on the brand and trademarks for the products, forecasting sales trends, managing sales budgeting, and developing policies related to channels of distribution, terms, and conditions of sale, product prices, trade, and cash discounts, conditions regarding the return of goods, the period of credit, the mode of payment, and so on.

Sales Performance Incentive Fund (SPIF)

A SPIF, or Sales Performance Incentive Fund, is an additional incentive to payees that are intended to promote specified behaviors for a limited period. This is common in contests where a sales manager may employ a SPIF to create an additional incentive for salespeople to sell aggressively until the conclusion of a quarter. It should be noted that, as with many terminologies in the realm of sales commissions, the actual words that comprise this acronym are widely debated. This may alternatively be referred to as a “Special Product Incentive Fund” or a “Special Performance Incentive Fund.” We’re not sure what the last “F” stands for when it’s spelled “SPIFF.”

Example: Catherine planned a dramatic conclusion with only four days remaining in the month. As a result, she announced a $500 SPIF for each sale until the end of the month.

Sales Performance Management(SPM)

It is concerned with the competencies required to keep the sales organization’s performance going smoothly. It aids in the planning, administration, analysis, and improvement of the performance of sales organizations. SPM integrates sales emphasis with both sales strategy and company goals.

• Plan design and modeling

• Quota and territory management  

• Plan communication and acceptance

• Compensation administration and reporting

• Incentive Compensation Management

• Dispute resolution

• Analytics

Sales Quota

Quota are sales objectives that salespeople must meet in a specific time frame to be eligible for variable compensation.

Sales Representatives  

Sales representatives work directly for the firm and serve as a liaison between the company and its clients. They often have exceptional communication, public speaking, and negotiation abilities, which enable them to grasp what the customer wants, build trust with the consumer, and display subject matter commands. They must guarantee that all clients receive the consumers and services they requested, as well as pitch future customers.

Sales Target

Sales Targets are goals for sales departments, teams, and individuals. Quotas and targets are used interchangeably. Typically, “Target” is used in APAC and EMEA, whereas “Quotas” is used in the US. Typically, targets and quotas are set for a specified period (aka period).

Sales Teams

A sales team is a group of employees that are responsible for selling a company’s products, subscriptions, and services to customers. It not only creates income but also has a significant influence on brand image, customer retention, long-term customer relationships, and so on.

Service Level Agreement  (SLA)

Service Level Agreements (SLAs) from software providers are assurances offered, such as an SLA to have an SPM with high availability; a 99.9% uptime.

Split

Split The amount of incentive payments and expenditures that are shared between two or more employees is referred to as the split.

Split sales commission agreements

Split sales commission agreements divide the commission earned on a sale into shares to compensate all salespeople for their efforts. Split sales commissions can be allocated evenly or customized to each payee.

Targeted Incentive Compensation

The entire amount of variable compensation earned by a sales representative if she meets her target performance is referred to as target incentive compensation (i.e. she hits quota). It excludes the base wage. When you combine target incentive compensation with base salary, you receive on-target earnings.

Term

It refers to the contract’s time frame. When a contract is ended early, it is subject to a charge or penalties.

Territory

Territories are groups of prospects and customers that are assigned to certain salespeople or teams to sell products or services. Each team is in charge of its own region and is commissioned appropriately.

Threshold

The threshold is the lowest level of performance that a salesperson must accomplish to receive an incentive payment.

Tiered Commission

The milestones put into an offer are referred to as a tiered commission. Here’s how it works: a basic commission is defined, along with its kind and length, and then other gradually larger commissions are piled on top of it to drive salespeople to sell more and earn more.

For example, the salesman earns a 2% commission on sales of up to $30,000. The salesman earns a 2.5 percent fee on sales between $30,001 and $60,000.

Top Performers

A company’s Top Performers are the sales reps who accomplish better win rates than others and contribute to the improvement of sales development procedures.

Total rewards

Total Rewards also known as total compensation, encompass all components of a payee’s earnings, such as long-term incentives, recognition and reward programs, perks, training, and so on.

True-up (aka Catch up)

True- Up is a payment adjustment procedure used to match or reconcile disparities between two amounts. The correction takes place at a predetermined true-up frequency. After all other payment computations have been performed, true-up adjustments are normally provided.

Variable Pay  

Variable pay is the amount of sales remuneration dependent on the payee’s degree of achievement or performance. It is also known as “pay-for-performance” or “at-risk” pay. When a payee does a bit better than normal, his/her compensation rises; when a payee underperforms, his/her pay falls.

Workflow

Workflows, as defined by Canidium, are automated business processes. Workflows inside SPM/ICM can contain procedures such as new sales rep onboarding, sales plan acceptance, dispute settlement, and so on. Workflows can be simple or complicated, depending on the needs of the organization.

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Simplifying Accounting Standards Still Complicated

Too bad accounting standard simplification doesn’t follow the same rules as Marie Kondo’s The Life-Changing Magic of Tidying Up . Eliminating the available for sale security classification doesn’t exactly spark the joy.  Every time the FASB drops a new Accounting Standard Update (ASU), it leaves you feeling weary. Maybe all the U.S. GAAP decluttering and other guidance purging only sparks joy for standard setters?  Sure, it’s meant to make your life easier, and maybe long-term, it will, but right now, it definitely doesn’t.  Enough already?  There have been many “completed FASB projects” in recent years that have modified how we recognize revenue , leases, investments, inventory… and the list goes on and on. In 2017, there have been 13 ASUs issued. 20 in 2016. 17 in 2015. It’s a hassle to keep up.  When I last covered standard overcomplication , it seemed like the FASB’s simplification initiative had hit a wa ll.  Lawrence Smith, a FASB member, alluded to the fact that resistance to change is crippling them from proceeding with the initiative… “When we started the simplification initiative we had a list of roughly 65 to 70 items that were suggested improvements–things that we could simplify. We probably did about five of them with relatively little resistance and everything we’ve tried to do since then has met with some resistance in one way or another.”  It may be pickup up the pace again. Another couple of simplifications dropped in ASU 2017-11. Or, if it isn’t, at least the FASB is still shaking things up whether it’s officially part of the simplification or not. Some changes, like dropping the temporarily restricted category from not-for-profit accounting seems easy enough: just combine temporarily restricted and permanently restricted net asset classes into one net asset class and, bingo, you’re done.  Others make your eyes cross. For example, the changes to revenue recognition still seem a little ominous even with Tim’s expert portrayal of the separation of performance obligations . But, we need to learn to love these five recognition steps ASAP. They start becoming mandatory for lots of companies in a little over a month. The one-year deferral graciously granted by the FASB flew by; the first deadline for public companies is December 15, 2017 .  How did we get into this mess?  Not only did we let this complexity happen, we asked for it like a grande, iced, sugar-free, vanilla latte with soy milk. Written almost 20 years ago, this 1999 Journal of Accountancy article spells it out:  The main reason for the increase in the volume and complexity of accounting guidance is that many auditors, corporations and regulators ask for it. They want to have clear answers for nearly all possible situations they might encounter. While most business people and senior partners of audit firms support general principles in theory, they often ask for much more detailed standards in practice.  One explanation for this is what I call the show me syndrome: the tendency for many companies or auditors to treat accounting standards as a book of laws and take the position that an accounting treatment not explicitly prohibited must be permissible. Thus, we sometimes hear clients say to their auditors show me the specific rule that says I cannot do so-and-so.  I’m glad at least we started dumping everything into one spot: the Codification. That was a massive step in the right direction. It’s basically the guest-room closet for accountants, so full you can’t close the door. If it’s somewhere, it’s in there.  The problem is that it’s really not fun to start going through the closet, to continue the analogy, and decide what to ditch.  And, we — as accountants — don’t just have one messy closet. We’ve got at least two . Dare I throw in taxes? Ugh, tax reform. Can we pick on another profession for a little while?  Is it worth it?  Is all of this consternation worth anyone’s time? On one hand, the reluctance to make changes could end up hurting us and we will have a convoluted set of standards forever, and never reach convergence with IFRS. As an aside, I remember when my professor in college said that would happen around 2011. I think 2030 is more like it.  But is that pace too fast or too slow?  Too much rapid change is bound to result in comparability and consistency issues. Right now, we may be tottering on the side of too much, and there are bound to be lots of reporting mistakes made over the next couple years. But, would slowing down help? We are known for standard update procrastination , so it may not matter. Unless someone conjures up some urgency like this guy suggests for ASC 606 (and I don’t know how you’d manage that), we’re dealing with quite the catch-22.  Image: Photo by Jeffrey Wegrzyn on Unsplash  The post Simplifying Accounting Standards Still Complicated appeared first on Going Concern .

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Simplifying Accounting Standards Still Complicated

Too bad accounting standard simplification doesn’t follow the same rules as Marie Kondo’s The Life-Changing Magic of Tidying Up. Eliminating the available for sale security classification doesn’t exactly spark the joy.

Every time the FASB drops a new Accounting Standard Update (ASU), it leaves you feeling weary. Maybe all the U.S. GAAP decluttering and other guidance purging only sparks joy for standard setters?

Sure, it’s meant to make your life easier, and maybe long-term, it will, but right now, it definitely doesn’t.

Enough already?

There have been many “completed FASB projects” in recent years that have modified how we recognize revenue, leases, investments, inventory… and the list goes on and on. In 2017, there have been 13 ASUs issued. 20 in 2016. 17 in 2015. It’s a hassle to keep up.

When I last covered standard overcomplication, it seemed like the FASB’s simplification initiative had hit a wall.

Lawrence Smith, a FASB member, alluded to the fact that resistance to change is crippling them from proceeding with the initiative… “When we started the simplification initiative we had a list of roughly 65 to 70 items that were suggested improvements–things that we could simplify. We probably did about five of them with relatively little resistance and everything we’ve tried to do since then has met with some resistance in one way or another.”

It may be pickup up the pace again. Another couple of simplifications dropped in ASU 2017-11. Or, if it isn’t, at least the FASB is still shaking things up whether it’s officially part of the simplification or not. Some changes, like dropping the temporarily restricted category from not-for-profit accounting seems easy enough: just combine temporarily restricted and permanently restricted net asset classes into one net asset class and, bingo, you’re done.

Others make your eyes cross. For example, the changes to revenue recognition still seem a little ominous even with Tim’s expert portrayal of the separation of performance obligations. But, we need to learn to love these five recognition steps ASAP. They start becoming mandatory for lots of companies in a little over a month. The one-year deferral graciously granted by the FASB flew by; the first deadline for public companies is December 15, 2017.

How did we get into this mess?

Not only did we let this complexity happen, we asked for it like a grande, iced, sugar-free, vanilla latte with soy milk. Written almost 20 years ago, this 1999 Journal of Accountancy article spells it out:

The main reason for the increase in the volume and complexity of accounting guidance is that many auditors, corporations and regulators ask for it. They want to have clear answers for nearly all possible situations they might encounter. While most business people and senior partners of audit firms support general principles in theory, they often ask for much more detailed standards in practice.

One explanation for this is what I call the show me syndrome: the tendency for many companies or auditors to treat accounting standards as a book of laws and take the position that an accounting treatment not explicitly prohibited must be permissible. Thus, we sometimes hear clients say to their auditors show me the specific rule that says I cannot do so-and-so.

I’m glad at least we started dumping everything into one spot: the Codification. That was a massive step in the right direction. It’s basically the guest-room closet for accountants, so full you can’t close the door. If it’s somewhere, it’s in there.

The problem is that it’s really not fun to start going through the closet, to continue the analogy, and decide what to ditch.

And, we — as accountants — don’t just have one messy closet. We’ve got at least two. Dare I throw in taxes? Ugh, tax reform. Can we pick on another profession for a little while?

Is it worth it?

Is all of this consternation worth anyone’s time? On one hand, the reluctance to make changes could end up hurting us and we will have a convoluted set of standards forever, and never reach convergence with IFRS. As an aside, I remember when my professor in college said that would happen around 2011. I think 2030 is more like it.

But is that pace too fast or too slow?

Too much rapid change is bound to result in comparability and consistency issues. Right now, we may be tottering on the side of too much, and there are bound to be lots of reporting mistakes made over the next couple years. But, would slowing down help? We are known for standard update procrastination, so it may not matter. Unless someone conjures up some urgency like this guy suggests for ASC 606 (and I don’t know how you’d manage that), we’re dealing with quite the catch-22.

Image: Photo by Jeffrey Wegrzyn on Unsplash

The post Simplifying Accounting Standards Still Complicated appeared first on Going Concern.

from Accounting News http://goingconcern.com/accounting-standard-simplification-complicated/

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Associate – US GAAP Accounting and Financial Analysis

About MSCIMSCI is a leading provider of critical decision support tools and services for the global investment community. With over 45 years of expertise in research, data and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading, research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.For more information, visit us at www.msci.com.Position Overview:Are you passionate about driving impact towards goals? Would you like to work in a collaborative environment where your contributions are recognized and rewarded? Are you driven to work for an industry-leading, fast-growing Fintech company? Are you a professional with a demonstrated ability to work well in teams and solve problems? If so, opportunities for professional and personal fulfillment in a dynamic, progressive organization await you at MSCI!MSCI is seeking an ambitious professional to join the Finance organization as Associate of US GAAP Accounting and Financial Analysis supporting MSCI’s growing subscription-based fees business. Subscription revenue represents the largest revenue stream at MSCI, at $1.1B+ for fiscal year 2019. Our Chicago office represents one of the key locations for US GAAP Center of Excellence at MSCI. This role will be responsible for performing various aspects of the financial and management accounting, technical accounting guidance, analytics and reporting related to Subscription Revenues arising from various contracts with clients. This position will also provide operational accounting, reporting and forecasting support to the Business and Sales teams, as well as provide accounting guidance for revenue recognition and reporting matters pertaining to customer contract arrangements. This role will be responsible for supporting a fast-growing global organization through partnering with key business stakeholders to deliver critical business initiatives and closely collaborate with business partners on financial analysis and forecasting. This position will also support special projects as they arise, including process improvement initiatives, system implementations and developing processes to account for new revenue contracts. This position will have exciting and unique opportunities to be a key contributor in a high growth and collaborative environment, while continuing to advance his/her career at MSCI’s Finance Controllers organization.Responsibilities:* Collaborate closely with key business partners, for example, Product Finance, Sales, Run Rate, and Billing to deliver critical business initiatives and identify value opportunities* Exhibit strong US GAAP technical accounting knowledge, particularly related to revenue recognition* Support review and analysis of MSCI’s client transactions to ensure appropriate revenue recognition treatment, perform relevant research, and document conclusions to be in compliance with US GAAP* Operate as a key team member of the subscription revenue team with responsibility for the accuracy and completeness of revenue recognition in accordance with US GAAP* Perform and support contract reviews and ensure proper revenue recognition in accordance with MSCI’s policies and revenue recognition standards for multiple revenue streams, including partnership agreements* Perform and support revenue operations, which includes execution of monthly revenue close, variance analysis, reporting, and account reconciliations for revenue and related accounts agreements * Support financial reporting including key performance indicators (KPI) and variance analysis * Document procedures and policies governing existing and future revenue accounting processes* Maintain controls and support audits performed by internal audit, external audit, legal entity, and SOX teams* Contribute and support special projects as assigned, including mergers and acquisitions accounting considerations and drive finance functional transformation projectsBasic Qualifications: * Minimum 2 years in Accounting or Finance related field * Bachelor’s degree in accounting or finance * Public accounting and/or industry accounting experience with multi-national public companies which comply with U.S. GAAPPreferred Qualifications:* Certified Public Accountant (CPA) or actively pursuing a certification* Public accounting experience with a Big 4 accounting firm* Strong knowledge in US GAAP and SEC reporting requirements, including some experience in ASC 606, preferably in a subscription-based business or technology industry* Strong verbal and written communication skills to explain complex accounting concepts in terms understood by team members with non-financial backgrounds* Passion for building relationship with business partners to accomplish critical goals* Passion for strong problem solving and analytic skills * Forward-thinking mind-set* Team player and desire to work effectively with diverse cultures in a global organization.* Strong work ethic with a proactive approach* Proficient in Microsoft Office suite of applications, particularly PowerPoint and ExcelWe are open to flexible working environment. Due to the great number of applications we receive for each of our open vacancies, we are unable to respond on an individual basis.To all recruitment agencies: MSCI does not accept unsolicited CVs/Resumes. Please do not forward CVs/Resumes to any MSCI employee, location or website. MSCI is not responsible for any fees related to unsolicited CVs/Resumes. MSCI Inc. is an equal opportunity employer committed to diversifying its workforce. It is the policy of the Firm to ensure equal employment opportunity without discrimination or harassment on the basis of race, color, religion, creed, age, sex, gender, gender identity, sexual orientation, national origin, citizenship, disability, marital and civil partnership/union status, pregnancy (including unlawful discrimination on the basis of a legally protected pregnancy/maternity leave), veteran status, or any other characteristic protected by law. PDN-200000M3

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