Compensation or Commissions
Many companies have employees with bonus or payments tied to a revenue target who may be impacted by RevRec changes:
For example: A sales person sells a year subscription to use a widget which generates $1,200 in revenue. In the past, if the sales person got paid 10% of the revenue when it was recognized, the sales person would get $120 once the sale closed. Under the new guidelines, this revenue now has to be prorated for recognition, so now the sales person would get $10 a month for a year based on the monthly recognition of the revenue – a significant change!
Understanding the changes in the revenue schedule and how it impacts employee compensation is critical and needs to be addressed early in the implementation process.
