Abstract:
The SingerLewak article outlines the common challenges venture-backed technology companies face when applying ASC 606 revenue recognition. It highlights issues such as reliance on spreadsheets, lack of systems to track usage or contract data, and difficulties with documenting accounting judgments — all of which become critical as companies scale. The article recommends early investment in scalable ERP or ASC 606-compliant systems, clear accounting policies, and cross-functional training to prepare for audits or funding rounds.
Why it Matters:
For fast-growing and venture-backed companies — especially in SaaS, tech, or subscription-heavy business models — applying ASC 606 incorrectly can result in restatements, audit delays, and reduced investor confidence. The article underscores that ad hoc tools (like spreadsheets) often fall short once scale and contract complexity increase. By recognizing revenue according to ASC 606 early — with proper systems, documentation, and processes — companies can maintain clean financials, support growth or exit strategies (IPOs, acquisitions), and avoid costly compliance or valuation issues. For founders, CFOs, and investors, this makes revenue recognition not just an accounting checkbox but a strategic, trust-building foundation.
