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Rev rec for SAAS providers

Charles Swan's Profile

Are there any accountng peculiarities for providers of SAAS solutions, particularly with revenue recognition, and deferal of commissions?


Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

For Rev Rec you certainly need to look at EITF 08-1 and see whether you have multi-element deals going in. Remember that any sort of services: installation, training, support if sold separately (talk to your auditor about this and the others), etc., will put you in multi-element area which then creates a whole host of work under 08-1. If you have not fully looked into this, I strongly suggest you do so!

Commission accounting is no different from a GAAP perspective, certainly. How you handle commissions at your company from a business and incentive perspective, may be very different. In SAAS, keeping the customer quarter after quarter is paramount, and very different than doing "traditional" licensed sales. So you may want to incent your sales people on different metrics (e.g. monthly renewal rate) and over different time periods.


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