Harvard Case - Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup
"Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup" Harvard business case study is written by Paul M. Healy, Jung Koo Kang. It deals with the challenges in the field of Accounting. The case study is 13 page(s) long and it was first published on : Jul 25, 2023
At Fern Fort University, we recommend that Stride Funding implement a comprehensive revenue recognition policy aligned with Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). This policy should incorporate a robust framework for tracking and recognizing revenue based on the specific nature of its business model and the various revenue streams generated by its operations. This will ensure accurate and transparent financial reporting, enhance investor confidence, and provide a solid foundation for future growth and expansion.
2. Background
Stride Funding, a fintech startup, is experiencing rapid growth and expansion. However, its current revenue recognition practices are inconsistent and lack a clear framework, leading to potential inaccuracies in financial reporting. This case study explores the challenges faced by Stride Funding in recognizing revenue from its diverse business model, which includes loan origination, loan servicing, and technology licensing. The main protagonists are the company's founders, who are grappling with the complexities of revenue recognition and its impact on financial reporting and investor perception.
3. Analysis of the Case Study
This case study can be analyzed using a framework that combines financial accounting principles with strategic considerations.
Financial Accounting:
- Revenue Recognition Principles: Stride Funding needs to adhere to the core principles of revenue recognition, which include the transfer of control over goods or services, evidence of an arrangement with the customer, the ability to reliably measure the transaction price, and the likelihood of collecting the consideration.
- GAAP and IFRS Compliance: The company must ensure its revenue recognition practices comply with both GAAP and IFRS, depending on its target markets and investor base.
- Revenue Recognition Methods: Stride Funding should adopt appropriate revenue recognition methods for each of its revenue streams, such as the percentage of completion method for loan origination, the time-of-service method for loan servicing, and the licensing method for technology licensing.
- Internal Controls: Strong internal controls are essential to ensure accurate revenue recognition and prevent potential fraud.
Strategic Considerations:
- Business Model: Stride Funding's business model is evolving, and its revenue recognition practices should reflect this evolution.
- Growth Strategy: The company's growth strategy should be aligned with its revenue recognition policy to ensure sustainable and profitable growth.
- Investor Relations: Accurate and transparent financial reporting is crucial for building investor confidence and attracting capital.
4. Recommendations
To address the revenue recognition challenges faced by Stride Funding, we recommend the following:
Develop a Comprehensive Revenue Recognition Policy: This policy should clearly define the company's revenue streams, the criteria for recognizing revenue, and the specific methods to be used. It should be aligned with GAAP and IFRS and be reviewed and updated regularly to reflect any changes in the business model or regulatory requirements.
Implement a Robust Revenue Recognition System: This system should include processes for tracking revenue transactions, documenting the basis for revenue recognition, and ensuring timely and accurate reporting. It should also incorporate internal controls to prevent errors and fraud.
Conduct Regular Revenue Recognition Reviews: Stride Funding should conduct regular reviews of its revenue recognition practices to ensure compliance with its policy and applicable accounting standards. These reviews should be conducted by qualified personnel and should include a review of internal controls, transaction documentation, and financial reporting.
Engage with External Auditors: The company should engage with independent auditors to provide an objective assessment of its revenue recognition practices and ensure compliance with GAAP and IFRS.
Educate Employees: Stride Funding should provide training to its employees on the company's revenue recognition policy and the importance of accurate financial reporting. This training should be tailored to the roles and responsibilities of employees and should be conducted on a regular basis.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations are consistent with Stride Funding's core competencies in fintech and its mission to provide innovative financial solutions.
- External Customers and Internal Clients: The recommendations will ensure that Stride Funding provides accurate and transparent financial information to its external customers and internal clients, including investors and regulators.
- Competitors: By implementing a robust revenue recognition framework, Stride Funding will be better positioned to compete in the fintech industry and attract investors.
- Attractiveness ' Quantitative Measures: The recommendations will improve the accuracy and transparency of Stride Funding's financial statements, which will enhance its attractiveness to investors and increase its valuation.
6. Conclusion
By implementing these recommendations, Stride Funding can establish a robust revenue recognition system that is aligned with GAAP and IFRS, ensuring accurate and transparent financial reporting. This will enhance investor confidence, improve the company's financial performance, and provide a solid foundation for future growth and expansion.
7. Discussion
Other alternatives not selected include:
- Outsourcing Revenue Recognition: Stride Funding could outsource its revenue recognition function to a third-party provider. However, this option may be costly and could lead to a loss of control over the company's financial reporting.
- Adopting a Simplified Revenue Recognition Model: Stride Funding could adopt a simplified revenue recognition model, but this may not be appropriate for a company with a complex business model.
Key assumptions include:
- Stride Funding's management is committed to implementing a robust revenue recognition system.
- The company has the resources to implement the recommended changes.
- The fintech industry will continue to grow and provide opportunities for Stride Funding.
8. Next Steps
The following timeline outlines key milestones for implementing the recommendations:
- Month 1: Form a task force to develop a comprehensive revenue recognition policy.
- Month 2: Implement a new revenue recognition system and train employees.
- Month 3: Conduct a pilot test of the new system and make adjustments as needed.
- Month 4: Conduct a full review of the revenue recognition system and ensure compliance with GAAP and IFRS.
- Month 5: Engage with external auditors to provide an independent assessment of the system.
By following these steps, Stride Funding can successfully implement a robust revenue recognition system that will support its growth and success.
Hire an expert to write custom solution for HBR Accounting case study - Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup
more similar case solutions ...
Case Description
The case explores the challenges of revenue recognition and financial reporting for Stride Funding (Stride), a fintech startup that has disrupted the student loan market. Stride leveraged proprietary machine learning and financial models to underwrite alternative student loans via Income Sharing Agreements (ISA). Under an ISA, borrowers agree to share a portion of their future earned income with a lender for a set period of time. Stride has adopted a distinctive business model that is analogous to the Software as a Service (SaaS) business. Rather than issuing ISAs directly, Stride performed as a program manager and created lending platforms that enabled educational institutions and programs to fund ISAs using their own capital. As a fund manager, Stride was responsible for developing credit models, administering the ISA contracts, managing account status, producing the loan documents, and updating the platform and program structure. In return for their services, Stride charged various fees to the institutions and programs. Having successfully completed its Series A round, Stride experienced substantial growth and improved business performance. As the company grew, its executives recognized the need to change its current financial reporting based on cash accounting to comply with U.S. GAAP. They anticipated that this change would affect how to report some of its revenues which are important financial metrics for early-stage companies like Stride. The CEO of Stride Funding wanted to know the full financial impact of this change and its implications for the next funding round. Moreover, they needed to determine whether it made sense for Stride, with its innovative business model, to adopt the GAAP reporting at this juncture.
🎓 Struggling with term papers, essays, or Harvard case studies? Look no further! Fern Fort University offers top-quality, custom-written solutions tailored to your needs. Boost your grades and save time with expertly crafted content. Order now and experience academic excellence! 🌟📚 #MBA #HarvardCaseStudies #CustomEssays #AcademicSuccess #StudySmart Write my custom case study solution for Harvard HBR case - Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup
Hire an expert to write custom solution for HBR Accounting case study - Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup
Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup FAQ
What are the qualifications of the writers handling the "Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup" case study?
Our writers hold advanced degrees in their respective fields, including MBAs and PhDs from top universities. They have extensive experience in writing and analyzing complex case studies such as " Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup ", ensuring high-quality, academically rigorous solutions.
How do you ensure confidentiality and security in handling client information?
We prioritize confidentiality by using secure data encryption, access controls, and strict privacy policies. Apart from an email, we don't collect any information from the client. So there is almost zero risk of breach at our end. Our financial transactions are done by Paypal on their website so all your information is very secure.
What is Fern Fort Univeristy's process for quality control and proofreading in case study solutions?
The Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup case study solution undergoes a rigorous quality control process, including multiple rounds of proofreading and editing by experts. We ensure that the content is accurate, well-structured, and free from errors before delivery.
Where can I find free case studies solution for Harvard HBR Strategy Case Studies?
At Fern Fort University provides free case studies solutions for a variety of Harvard HBR case studies. The free solutions are written to build "Wikipedia of case studies on internet". Custom solution services are written based on specific requirements. If free solution helps you with your task then feel free to donate a cup of coffee.
I’m looking for Harvard Business Case Studies Solution for Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup. Where can I get it?
You can find the case study solution of the HBR case study "Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup" at Fern Fort University.
Can I Buy Case Study Solution for Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup & Seek Case Study Help at Fern Fort University?
Yes, you can order your custom case study solution for the Harvard business case - "Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup" at Fern Fort University. You can get a comprehensive solution tailored to your requirements.
Can I hire someone only to analyze my Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup solution? I have written it, and I want an expert to go through it.
🎓 Struggling with term papers, essays, or Harvard case studies? Look no further! Fern Fort University offers top-quality, custom-written solutions tailored to your needs. Boost your grades and save time with expertly crafted content. Order now and experience academic excellence! 🌟📚 #MBA #HarvardCaseStudies #CustomEssays #AcademicSuccess #StudySmart Pay an expert to write my HBR study solution for the case study - Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup
Where can I find a case analysis for Harvard Business School or HBR Cases?
You can find the case study solution of the HBR case study "Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup" at Fern Fort University.
Which are some of the all-time best Harvard Review Case Studies?
Some of our all time favorite case studies are -
Can I Pay Someone To Solve My Case Study - "Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup"?
Yes, you can pay experts at Fern Fort University to write a custom case study solution that meets all your professional and academic needs.
Do I have to upload case material for the case study Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup to buy a custom case study solution?
We recommend to upload your case study because Harvard HBR case studies are updated regularly. So for custom solutions it helps to refer to the same document. The uploading of specific case materials for Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup ensures that the custom solution is aligned precisely with your needs. This helps our experts to deliver the most accurate, latest, and relevant solution.
What is a Case Research Method? How can it be applied to the Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup case study?
The Case Research Method involves in-depth analysis of a situation, identifying key issues, and proposing strategic solutions. For "Revenue Recognition at Stride Funding: Making Sense of Revenues for a Fintech Startup" case study, this method would be applied by examining the case’s context, challenges, and opportunities to provide a robust solution that aligns with academic rigor.
"I’m Seeking Help with Case Studies,” How can Fern Fort University help me with my case study assignments?
Fern Fort University offers comprehensive case study solutions, including writing, analysis, and consulting services. Whether you need help with strategy formulation, problem-solving, or academic compliance, their experts are equipped to assist with your assignments.
Achieve academic excellence with Fern Fort University! 🌟 We offer custom essays, term papers, and Harvard HBR business case studies solutions crafted by top-tier experts. Experience tailored solutions, uncompromised quality, and timely delivery. Elevate your academic performance with our trusted and confidential services. Visit Fern Fort University today! #AcademicSuccess #CustomEssays #MBA #CaseStudies
How do you handle tight deadlines for case study solutions?
We are adept at managing tight deadlines by allocating sufficient resources and prioritizing urgent projects. Our team works efficiently without compromising quality, ensuring that even last-minute requests are delivered on time
What if I need revisions or edits after receiving the case study solution?
We offer free revisions to ensure complete client satisfaction. If any adjustments are needed, our team will work closely with you to refine the solution until it meets your expectations.
How do you ensure that the case study solution is plagiarism-free?
All our case study solutions are crafted from scratch and thoroughly checked using advanced plagiarism detection software. We guarantee 100% originality in every solution delivered
How do you handle references and citations in the case study solutions?
We follow strict academic standards for references and citations, ensuring that all sources are properly credited according to the required citation style (APA, MLA, Chicago, etc.).