To automate financial compliance with ASC 606/IFRS 15 regulations, Chargebee integrates with Softrax, an enterprise Revenue Management system. You can sync subscription information to Softrax and generate revenue forecast schedule required for recognizing revenue on a monthly basis, in your Accounting system.
Revenue recognition principle describes when revenue should be recognized/realized and earned, not necessarily when received. Revenue is a core element of the financial function. However, there have been multiple ways in which companies have recognized revenue. The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) identified this misalignment and collaborated to create a global standard that aligns how companies recognize revenue from contracts with customers.
The ASC 606 accounting standards will take effect for all US-based private entities with reporting periods after December 15, 2018. Public entities and international businesses under IFRS jurisdictions are subject to these changes by 2019, almost every business across the globe will be impacted.
The new guidance on revenue recognition affects organizations that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards.
Here's the 5 step process as defined in ASC 606 -
1) Identify the contract: Identify the criteria that must be met when establishing a contract with the customer
2) Identify the performance obligations: Identify the items to be recognized in the contract
3) Determine the transaction price: Elaborate on what must be considered when establishing the transaction price, the amount the business would expect to receive, for transferring the goods or services to the customer, if sold separately
4) Allocate the transaction price: Determine how the transaction price is allocated across the contract's separate performance obligations (proportionately across the performance obligations in the contract)
5) Recognize revenue: Revenue to be recognized as the business meets each performance obligation, can be referred to in the Revenue forecast schedule for the entire term
Here's an overview of how data in Chargebee maps in Softrax:
Invoices/ Credit Notes
1. Which plan is Softrax integration available in?
The Chargebee - Softrax integration is available on all paying plans.
2. Will Chargebee automate journal entries in my Accounting/ERP system?
No, Chargebee will only sync subscription data to Softrax. You should manage revenue recognition in your Accounting system.
For more information, please get in touch - we would like to understand your use cases.