Over the past few weeks, we’ve been working diligently behind the scenes and are happy to announce the arrival of our long-awaited revenue recognition feature!
By heading to our accounting reports page, you will be able to view an enterprise level calculation of revenue recognized by monthly billing periods, based on daily interval performance as well as any deferred revenue that has yet to be recognized.
What is revenue recognition?
Revenue recognition is an accounting principle where revenue is recognized and realized over the period the product or service is provided, not when initial payment is received. This methodology is heavily recommended for more accurate reporting.
For example, let's say:
- A customer subscribes to a Monthly plan on Jan 1st, 2021
- Service is rendered for the month of Jan
- Subscription is renewed monthly on the 1st of Feb, and a recurring fee will be paid monthly going forward.
Since the service is fully provided in Jan, the revenue is completely recognized in Jan
- A customer subscribes for a Quarterly plan on Jan 1st, 2021
- The initial revenue received is $90
- No additional revenue is received for the 2nd and 3rd months however, service must still be rendered for the 2nd and 3rd months
Deferred revenue is the remaining revenue that has yet to be recognized. In this example, with the customer who subscribes to a $90 Quarterly plan on Jan 1st, 2021; $30 of revenue would be recognized when the service is provided, and the remaining revenue to be recognized is $60 across the rest of the subscription period
You can select a time period to generate a report of your recognized or deferred revenue and even filter by products, plans, subscriptions, invoices, or credit notes.
You also have the option to download your revenue recognition reports and deferred revenue reports in a .CSV format so you can share your revenue reports with your accountant.