Comments on: New revenue recognition rules might change the reports but not the checking account http://insidehpc.com/2009/10/05/new-revenue-recognition-rules-might-change-reports-not-checking-account/ HPC News Without the Noise for Supercomputing Professionals | insideHPC Sun, 09 Jun 2013 01:54:13 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: RecognizeMe http://insidehpc.com/2009/10/05/new-revenue-recognition-rules-might-change-reports-not-checking-account/#comment-207067 RecognizeMe Tue, 09 Feb 2010 04:11:18 +0000 http://insidehpc.com/?p=7663#comment-207067 Peter is not incorrect but is really missing the point of the article, which, i think, is to illustrate the difference (or impact of the diff) in accounting standards. It's important, but not relevant, to highlight those issues here. In my past company, recognizing hw rev as part of a solutions/bundle was already in practise...that was 2004. was not sw related, but consumables, labor & maybe a small % in sw. Peter is not incorrect but is really missing the point of the article, which, i think, is to illustrate the difference (or impact of the diff) in accounting standards. It’s important, but not relevant, to highlight those issues here.

In my past company, recognizing hw rev as part of a solutions/bundle was already in practise…that was 2004. was not sw related, but consumables, labor & maybe a small % in sw.

]]> By: John West http://insidehpc.com/2009/10/05/new-revenue-recognition-rules-might-change-reports-not-checking-account/#comment-185828 John West Tue, 06 Oct 2009 13:15:12 +0000 http://insidehpc.com/?p=7663#comment-185828 Peter - thanks. You are right, I did simplify things in my post. Walking that tightrope between exposing new information for those who are really only interested in the technology but still trying to get useful information out to those like you that know more about the business. Actually, I've only been on the payer side of the HPC business; it sounds like you are on the payee side, and it's good to have that perspective. Peter – thanks. You are right, I did simplify things in my post. Walking that tightrope between exposing new information for those who are really only interested in the technology but still trying to get useful information out to those like you that know more about the business. Actually, I’ve only been on the payer side of the HPC business; it sounds like you are on the payee side, and it’s good to have that perspective.

]]> By: Peter http://insidehpc.com/2009/10/05/new-revenue-recognition-rules-might-change-reports-not-checking-account/#comment-185760 Peter Tue, 06 Oct 2009 00:03:07 +0000 http://insidehpc.com/?p=7663#comment-185760 Clarification on this. While your focus here is on revenue recognition, you've over-simplified the "checking account" side of these transactions. These can also be complicated. Once the system is accepted, the IT company will rarely get a check right away. They will issue an invoice right away, but the customer may wait before paying. (And there's always a possibility that the customer might never pay if they're having financial problems or funding falls through.) Meanwhile the IT company has to pay its staff, and has bought parts and components from all sorts of vendors - these bills have to be paid. To help with this, customers with really large projects will sometimes include some advance payments. Tied to milestones, such as when the order is signed, some demo is run, or the system is shipped. This can help the IT company pay its bills while they're putting the system together, without having to wait until everything is shipped and accepted. This is cash that goes into the "checking account". Bottom line is that all the finances around big HPC deals are critical to get right, and can be very complicated. CFOs and other finance VPs (and no, I'm not one) rarely get the credit they deserve to both keep their companies afloat and the SEC happy. Clarification on this. While your focus here is on revenue recognition, you’ve over-simplified the “checking account” side of these transactions. These can also be complicated.

Once the system is accepted, the IT company will rarely get a check right away. They will issue an invoice right away, but the customer may wait before paying. (And there’s always a possibility that the customer might never pay if they’re having financial problems or funding falls through.) Meanwhile the IT company has to pay its staff, and has bought parts and components from all sorts of vendors – these bills have to be paid.

To help with this, customers with really large projects will sometimes include some advance payments. Tied to milestones, such as when the order is signed, some demo is run, or the system is shipped. This can help the IT company pay its bills while they’re putting the system together, without having to wait until everything is shipped and accepted. This is cash that goes into the “checking account”.

Bottom line is that all the finances around big HPC deals are critical to get right, and can be very complicated. CFOs and other finance VPs (and no, I’m not one) rarely get the credit they deserve to both keep their companies afloat and the SEC happy.

]]> By: Valuable Internet Information » New revenue recognition rules might change the reports but not the … http://insidehpc.com/2009/10/05/new-revenue-recognition-rules-might-change-reports-not-checking-account/#comment-185744 Valuable Internet Information » New revenue recognition rules might change the reports but not the … Mon, 05 Oct 2009 21:18:55 +0000 http://insidehpc.com/?p=7663#comment-185744 [...] Read the original here:  New revenue recognition rules might change the reports but not the … [...] [...] Read the original here:  New revenue recognition rules might change the reports but not the … [...]

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