If you're in Finance, you've probably heard the buzz around ASC 606. With Ledger, QuotaPath handles expense recognition and keeps you 606 compliant by handling the following:
Collecting all the commission data you need to account and track for ASC 606
Creating expense schedules, either by amortizing or recognizing immediately
Viewing Recognized records and where they fall on the calendar year
Exporting Recognized records to a waterfall report to support required journal entries and upload into your accounting software
Let's walk through it!
Once earnings have been approved for your team, they will end up in the Unrecognized tab in the Ledger section.
Use filters to help streamline your process.
Filter by Paths, which is how we think about “categories of revenue,” like categories of expenses. It’s possible the commissions in each Path will spread out in the same period of time.
Filter down by time period. Typically users look at the previous month or quarter.
Tip: You can export all Unrecognized expenses, which some companies report on.
Select all or recognize one deal at a time and it will be broken down by Path.
You can choose how you'd like to recognize the balance – either Straight line (Amortize) or Immediately.
Amortization means spreading payments over multiple periods, or in QuotaPath, recognizing commissions over a set term to match your revenue recognition schedules.
Tip: The most common use case for amortization is spreading it out over the average customer life. So if on average, you have a customer life of 24 months, you could amortize all of your expenses over a 24 month period.*
Tip: If a deal is less than 12 months, it is common to recognize immediately, which is called Practical Expedient Rule.*
Choose to prorate daily or monthly. And add additional costs (sometimes called "fringe" benefits), like 401k or insurance.
Once you've set your recognition schedule, you'll see the deals show up in the Resolved tab. There's a nice graph of the total accumulation of expenses and where they show up on the calendar year.
You can export your expenses for audit-ready reports.
This waterfall report aggregates and breaks down expenses and days in which they fall. Then you can upload it right into your accounting software!
Ledger is a part of QuotaPath Plus and only available to paid Workspaces. Only Admins will have access to use Ledger.
*The materials on this article are for informational purposes only and do not constitute accounting or tax advice. Persons receiving information through this article should not act or rely upon this information without consulting their own accountants or tax advisors.