We are revising our software licenses to be "all-inclusive," meaning there is one price for a term that includes the license, maintenance, and services. Most agreements are three years. How do we recognize revenue under GAAP?

revenue-recognition license gaap

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We want to make our contracts more useful to managers throughout the company. Full text search of contract files does not actually help them get what they need because it often shows too many or too few results. Even if they find a useful provision, the manager still has to interpret the language, which is the job of our legal department. Is there a way to track provisions in a more structured and consistent manner that would show on a report? We would like to show the obligations or requirements across our contract portfolio.

contracts contract-management

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Wow. That is an enterprising product management effort for someone not in product management. I hope your company rewards your initiative even if they don't support the project. Companies differ widely on whether and when to include opportunity cost analysis for internal business plans. Most companies probably don't follow any process. Sounds like it will be difficult for you to include opportunity cost analysis without access to all the projects the product management is considering. I would recommend focusing on the solid projections of revenue. No hockey sticks! Estimating revenue potential is the most difficult part of an internal business plan. Identify someone in the organization, maybe in finance or product management, who can give you an objective assessment of your financial model.

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As anecdotal support for the previous reply, we found that a process where people have time to work on their projects and see results they become really motivated. On our product management team, we let product managers shepard an idea from concept to requirements to development to release and finally to support.

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Based on your description, it sounds like you want to know about attribution for a commercially copyrighted material. There are rules for material licensed under the "creative commons," but I'll focus on the commercial copyright.First of all, the copyright holder might have spelled out the rules, like what language to use, when and how you can use the copyrighted material, etc. If not, and assuming you have a broad license, it is probably enough to say something like, "[NAME/DESCRIPTION OF MATERIAL] used with permission from [NAME OF COPYRIGHT HOLDER]." It would be prudent to have the copyright license in writing. Most such contracts spell out the terms and conditions of use. I've included an example from Microsoft. Keep in mind this isn't your license and they aren't negotiating. This is just an example of the kinds of conditions a copyright holder might include.

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Also consider that an S Corp is a federal tax designation. As such, IRS regulations determine the restriction for companies formed to take advantage of S corp taxation (like a partnership). LLCs are a more modern type of legal entity based on state law. As a general rule, the IRS allows LLCs to elect partnership (pass-through) tax status. So LLCs are sometimes referred to as "disregarded entities." LLCs have a great deal more flexibility than S Corp from a governance and management perspective. LLCs have certainly been one of the fast growing types of legal entities.

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Within your contract management system, create a form that lets you pick the compliance requirement. The form should allow you to summary the purpose of the review. It should also give you space to indicate the outcome of the review. Ideally, you could keep a history of each update.

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In addition to financial terms, consider guidance on deal structure, particularly for points that are important to your company. Stock or asset purchase. Role of owners and managers. Follow on investment. Even though an IOI seems like an informal document, you should have your legal counsel review it first.

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At the most basic level, evergreen contracts continue until terminated. Auto-renewal contracts provide a procedure for terminating the contract on a date certain.To illustrate: an evergreen contract might say, "either party can terminate this contract at any time upon 30 days written notice." That is quite different from an auto-renewal agreement that says: "This contract shall automatically renew for 3 years on December 31, 2016, unless either party provide written notice of termination by October 31, 2015." The auto-renewal example actually has two termination options. First, it can terminate on December 31, 2016, if one provide notice, OR it can terminate on December 31, 2019, if it auto-renews for three years. In neither case is the auto-renewing contract evergreen.

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In a perfect world, you would ask for everything about a counterparty's corporate structure. But you need to be practical. Tailor the request to the size of the deal, the importance of the deal, and your history with the counterparty. Consider that as a buyer you probably have more leverage in the early stage negotiation, because of the sales person wants to win your business. In many cases it will be enough to verify their corporate identity (the kinds of questions you're already asking) along with credit information. The credit information you want is likely available from third parties like Dun & Bradstreet.

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You should also consider that email sent to people outside the United States might subject to an entirely separate set of rules. For example, in the European Union, privacy restrictions are much more restrictive, especially when it comes to electronic communications.

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One of the best organizations for thinking about product management is Pragmatic Marketing.

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