For companies facing complex financial reporting challenges, hiring a strategic mix of revenue recognition consultants can result in a myriad of benefits, including improved regulatory compliance, risk mitigation, and revenue maximization. As Ben Thanadilokul, a Managing Director within Tandym Group’s Pro vertical explains, “These specialized consultants have a satellite view—they are seasoned to interpret and apply intricate accounting standards for businesses with diverse revenue streams or complex contractual agreements.”
Here are some key benefits of hiring revenue recognition consultants:
Revenue recognition consultants are experts in accounting principles and have a deep understanding of the relevant accounting standards. “Many consultants keep themselves updated with the latest trends, which is crucial as accounting standards evolve over time,” says Ben.
Adhering to proper revenue recognition principles is essential for regulatory compliance. Experienced revenue recognition consultants can help ensure that the company’s revenue recognition practices are in line with standards like ASC 606 or IFRS 15, reducing the risk of non-compliance or financial restatements, as well as the negative consequences that often come along with it (damaged reputation, investor confidence, and legal implications, to name a few).
Companies involved in complex transactions, such as long-term contracts, multiple-element arrangements, bundled products, or revenue recognition related to software, may find it challenging to navigate the appropriate accounting treatment. Ben explains, “Experienced revenue recognition consultants can provide guidance on how to account for these transactions correctly.”
Consultants can review a company’s internal controls related to revenue recognition to identify potential weaknesses or inefficiencies. This offers an unbiased perspective and can identify potential issues that might be overlooked by internal employees who are accustomed to the company’s processes and practices. “Consultants are not influenced by internal politics or conflicts of interest, which is overwhelmingly positive. In fact, they ensure objective assessments that can help prevent errors, fraud, or misstatements in financial reporting,” Ben contributes.
Revenue recognition consultants can assist in analyzing large volumes of data related to revenue streams. They may also help integrate accounting systems and enterprise resource planning (ERP) software to streamline the revenue recognition process and improve accuracy. Given the project-based nature of an integration, using consultants is especially beneficial so that you are only engaging if, and when, you need the support.
Revenue recognition is often a periodic or project-based need during financial audits, mergers and acquisitions, or when implementing new accounting standards. Hiring external consultants can be more cost-effective than maintaining an in-house team of revenue recognition specialists, particularly for smaller or mid-sized companies that don’t require constant support. In Ben’s experience, “Cost and flexibility have been two major factors for clients when hiring consultants—often, it’s easier to hire based on project-based needs vs. hiring a team of in-house specialists.”
Overall, revenue recognition consultants offer specialized expertise, reduce the risk of errors and compliance issues, optimize revenue strategies, and help companies navigate the complexities of revenue recognition standards. If you’re looking for improved financial reporting accuracy, transparency, and overall financial health for the organization, consider hiring consultants to assist.
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