By Iman GhodosI, VP and GM Asia Pacific at ZUORA

You should have heard by now that Australian companies are required to report revenue under a completely new framework, with the compulsory AASB15 having taken effect on 1 January 2018.

Before the 2019 financial year begins in Australia, you should ask yourself the following questions:

Will revenue recognition for your subscription-based company be impacted by the new revenue recognition standards?

Has your CFO reviewed your accounting policies and adapted your reporting processes to the new requirements of their role?

Have your accounting teams consulted with their accounting advisors and financial auditors to validate that your accounting policies are compliant under the new standard?

These revenue standard changes hold the potential to heavily impact sales, marketing, and pricing strategies -  particularly for companies using subscription models. As such, there are new accounting policies and financial reporting processes that CFOs will need to adopt in order to give their company the best foot forward as the impact of AASB15 takes effect in Australia.

With the introduction of AASB15, the accounting industry will reshape, affecting revenue recognition in the Australian financial landscape in 2018.

CFOs need to streamline technology in order to both run efficient financial reporting operations at scale, be compliant with the evolving financial regulatory landscape, and continue to produce profit.

What this means is that CFOs will need to implement an automation tool for their company's revenue recognition process under the new accounting standards.

With the introduction of such technology, CFOs will remove the burden from the finance department who would otherwise have to manage hundreds and thousands of contracts and manually calculate revenue. This is an extremely time consuming process.

With the adoption of the correct software, CFOs can automate revenue calculation, reallocation of revenue resulting from contract changes, fair value recognition of revenue for bundled contracts (multiple element arrangements) and many more deeply complex and nuanced requirements under the new standard.

Revenue recognition errors are found to be the number one reason for restatements, and with errors delaying reports and ruining reputations, CFOs need to ensure compliance with the new AASB15 regulation.

Technology and automation can significantly reduce compliance risk and highly error-prone manual processes.

When ASC 606 was introduced in the United States in 2016, companies were forced to reevaluate their revenue, with General Motors announcing an estimated $1 billion reduction in revenue and Uber halving its revenue.

As such, the CFO needs to be vigilant in getting ahead of these standards and understanding its potential impact to their business and reporting metrics.

CFOs need to be immaculate planners due to the level of disclosure required under these news accounting standards.

Understandably, companies will want to limit the amount of information they share with their competition, but as increasing transparency is demanded by accounting bodies and auditors, the CFO needs to work closely with them to decide how much disclosure is enough and leverage their revenue automation technology to calculate these mandatory disclosures without creating a strain within their accounting teams.

Now, more than ever, CFOs need to ensure there is collaboration between the product, marketing, and sales teams to connect the business's pricing and packaging needs, and in turn connect the impact of revenue operations and revenue outcomes.

As such, the CFO needs to ensure that sales teams understand the business motivations behind different pricing and packaging models, whilst the pricing teams will need to understand revenue accounting implications of their go-to-market decisions.

Without this alignment between marketing and sales teams, the CFO will find their finances in the red due to creative pricing, bundling, and discounting packaging choices.

Therefore, it is important for the CFO to ensure that sales-team representatives are on the pricing committee and vice-versa. This will allow the development of templates and processes to model all future deals from, and engage cross-functional teams.

Just as the CFO needs to ensure collaboration between team, there also needs to be a tight alignment between CFOs and CIOs. CFOs must understand these new standards inside out, review how they apply to their sales models, and shape the accounting policy updated accordingly.

As such, the CIOs will need to work in collaboration with the CFOs and controllers to ensure there is correct data capture upstream and throughout the contract lifestyle. This will ensure that vital information is available for revenue recognition purposes.

With a Deloitte study showing that 83% of participants had yet to come to grips with the underlying complexity and detailed guidance undermining the Standard, ensure that your company and CFO understands how these changes have already affected the business and will continue to do so.

These changes can still give the CFO a unique opportunity to create significant value across their company and deliver first-time correct solutions to these changes.

Deloitte has described AASB15 as ‘one of the most significant financial reporting compliance changes since 2005' making them a new standard for running efficient financial reporting operations.