Startup Accounting
Contract Modifications, Upgrades, and Renewals Under ASC 606
Collated by Harry Prabandham
Curated by Rubric Financial
Last updated
1 / 5
What Counts as a Modification
- A contract modification is a change in the scope or price of a contract that both parties approve.
- Approval can be written, oral, or implied by customary business practices, as long as it creates enforceable rights and obligations.
- Mid-term upsells, added seats, plan changes, and negotiated renewals are all common SaaS modifications.
- If the parties have not yet approved a change in scope, you continue to apply the existing contract terms.
Go deeper on this topic: SaaS Revenue Recognition Under ASC 606: A Founder's Guide to Getting It Right→
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About the author
Harry PrabandhamFounder & CEO
Founder and CEO of StartupCFO. MBA from Wharton, MS in Computer Science, and decades of experience building and advising venture-backed startups.
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