Master subscription revenue deferrals and recognition postings with LISA BusinessPro for Microsoft Dynamics 365 Finance

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The #subscriptioneconomy is a growing domain in terms of revenue and customer-adds. As a result, many businesses are considering moving towards subscription models or have already onboarded in “as-a-service” offerings. At face value, subscriptions seem logical and comprehensive. You define a customer-based agreement for a period, ensure you deliver accordingly and off you go.

That does not count for the financial considerations a subscription business must decide upon. Operating a subscription business model opens a new compliance chapter. A key component of financial compliance is adhering to IFRS 15 or ASC 606. The main aim of IFRS 15/ASC 606 is to recognize revenue for transfer of goods/services promised to customers in an amount reflecting the expected consideration in return for those goods or services. This can also work in reverse when doing the same with your suppliers, resulting into cost recognition models.

In this document bluefort would like to lay out the different considerations a business must decide upon in terms of developing a highly automated financial system for subscription models.

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