Revenue Recognition Overview

Projector's revenue recognition capabilities enable organizations to understand how to recognize historical and projected revenue according to generally accepted finance and accounting rules. Recent large-scale accounting issues in the market have forced increased scrutiny on revenue recognition practices in services organizations. Projector provides data and analytical tools necessary to assist organizations in making informed decisions about revenue recognition adjustments.

Revenue recognition adjustments may be necessary when clients have negotiated a limit in the amount of money they have agreed to pay for a particular engagement. In these cases, organizations need to pace the rate at which they recognize or earn revenue based on how much of the project has actually been completed, no matter when the actual payments for the work are made. Projector calculates the rate at which revenue is recognized such that at the end of the project, the full system revenue is not more than the negotiated price cap. The rules for whether the final system revenue can be lower than the negotiated price cap are different depending on whether the contract was a fixed price or a time and materials with a cap agreement.

Projector calculates revenue recognition at the engagement level, since engagements are the entities that are defined by individual contractual agreements with a client.