ASC 606 for SaaS, the short version.

ASC 606 is a five-step framework, but for most SaaS the practical outcome is straightforward: revenue recognizes ratably over the subscription term as the service is delivered. Cash collected in advance sits in deferred revenue and releases into revenue each month. Setup fees, implementation fees, and term commitments complicate the picture; they sometimes have to be allocated to performance obligations and recognized differently. The places it gets harder: usage-based pricing (recognize as consumed, not as billed); hybrid plans with both subscription and consumption components (allocate per the standalone selling price method); contracts with cancellation rights or service-level credits (estimate variable consideration); and multi-product bundles. Doing this manually in a spreadsheet works at low volume. Past about a hundred customers it stops working, and you need a tool — RevRec, Maxio, or whatever fits — fed clean data from your billing system. We build the deferred-revenue rollforward into the monthly close so the balance sheet ties out at every period end.