Troubleshooting ASC 606
Private equity CFOs are certainly in a challenging position. While it is a slightly different role than you’ll see within the public sector, the great thing about it is that they can still learn from the challenges and obstacles that the public industry faces.
This is especially true when it comes to ASC 606, as we’ve already seen how it impacted the private industry last year.
What is ASC 606?
ASC 606 is a new standard that influences when and how a company recognizes revenue. And yes, this will impact private companies as well—it was adopted January 1, 2019. While there were certainly a lot of issues in the public sector, private companies can learn from those and move forward at a faster, more secure rate.
Essentially, proper revenue reporting is the cornerstone to company success, but it also provides critical insight that may influence investor interest in a company.
What Can Private Companies Do to Drive ASC 606 Success?
The best thing that the private industry can possibly do is stay ahead of the issues. Being prepared for the potential fallout and concerns of investors is almost a guarantee.
Let sponsors in on the process and be as forthcoming as possible about what the new revenue reporting looks like.
Not only will this keep the investor’s confidence intact, but it will help the business run more smoothly overall.
You’ll likely experience shifts in revenue swings, and while this is expected, a good CFO will know how to ride that wave so that the company remains on task and investors understand the impact.
Final Thoughts on Troubleshooting ASC 606
While ASC 606 is likely to create some confusion and even possibly some upset initially, a quality CFO will utilize their strategic thinking to ensure that the financial climate remains as consistent as possible.
This will mean utilizing good judgment, quality communication, and remaining calm during any type of revenue rollercoaster created.
After all, it’s the skill and ability of the CFO that ensures that new standards don’t totally overtake a company’s ability to thrive. Only those that have such skills will be able to troubleshoot their way toward success.
You may also enjoy, Understanding ASC 842.
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