continued from here:
There are several issues that must be considered around agreement language that can impact how the revenue is reported.
- Gross versus Net Revenue reporting: Service provider costs, related party transactions and alliance agreements.
- Pricing structure and embedded leases
Compliance and control is important since it offers assurances to investors and more often than not, it is the law.
Points and Reminders:
• Clients and service providers need their accounting experts to sign off on any accounting treatments.
• Every contract can be different; slight nuances to contract language can alter accounting treatments.
• Recognizing and addressing these issues upfront, in the client’s sourcing strategy, improves their RFP and negotiation position.
• Everyone benefits from a clearly defined strategy.
And one last parting thought, “It’s an Accounting Issue. No, it’s a Contract Issue.”