The rumor is true: revenue recognition as we know it will soon undergo a major makeover that will affect your business accounting. Although these changes won’t officially take place for another couple of years, now is the time to prepare. Here are a few steps you can take to get ready:

Get familiar with the new standard.

While this may be hot news in the accounting world, many companies aren’t up to speed on what the new revenue recognition rules are about. In a nutshell, the Financial Accounting Standards Board (FASB) and International Standards Board (IASB) have spent the last few years developing a new standard, Revenue From Contracts With Customers, to clarify the existing revenue guidance, which is widely seen as too vague. When implemented, the new standard will essentially standardize how contracted revenue is recognized across entities, jurisdictions, and industries worldwide, and will apply to any situation where there is a contract for goods and services.

The new standard is slated to affect publicly traded companies in 2018; private companies are expected to fall under its jurisdiction in 2019. Because the changes represented by this standard are so monumental, it’s possible the effective dates could be pushed out.

Alert your bank.
It’s easy to think you have plenty of time, but the impacts of this new standard will likely be stretch beyond your financial statements. The structure of debt covenants, for instance, could change significantly, so make sure your bank understands the specific ways in which your company will be affected.
Prepare your accounting system.
At the very least, there will be shifts in the type or format of financial data you report. Your accounting system will need to adapt. Because modifications to an accounting system take time—and should be well thought-out to begin with—it’s a good idea to start looking into this issue now.
Sit down with your accountant.
This may be the most important step you can take. Getting your accountant on board before the changes take effect is a prudent move that can save you time and money in the long run. Your accountant can help you ready your company—as well as your bank and your accounting system—to be compliant from day one.