Revenue Recognition & Deferred Revenue

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Please contact our commercial team if you are interested in using this functionality.

Revenue recognition is an accounting approach used to ascertain how revenue should be recorded during the period when a service is utilized. In addition to the data export that can be found under our invoice page, we also offer reports in which we pre-calculate revenue recognition metrics.

Reports

At this moment we offer the following reports on Revenue recognition:

Recognised Revenue: This is the actual revenue amount that should be recognised in a certain month.
Deferred Revenue: This is the pending revenue that should recognised for the remainder of the service period (e.g. the subscription period). On a monthly level this is calculated as the end of month pending revenue.

In addition to the offered reports, we also include information on the applicable revenue recognition periods in the downloadable invoice line report, refer to report downloads.

Recognised revenue

The recognised revenue report provides the base amount to be recognized for each month. Additionally, it incorporates the anticipated recognized revenue for coming months, which is already present in either Final or Draft invoices.

Revenue can be recognized with various calculation schedules:

Example of a straight line per day revenue recognition schedule

In this example we assume that a customer has an annual subscription that has a flat fee of €365 that is invoiced on Jan 1, 2023 for the period of Jan 1, 2023 to Dec 31, 2023.

The recognised amount is the base amount (invoice amount minus tax). The recognised amount is aggregated by month and will be:

For Jan, 2023: €31;
For Feb 2023: €28, etc.

Commitments and discounts are also applied and spread over the entire period.

Deferred revenue

The deferred revenue report provides the base amount that is pending for the remainder of the service period.

Example:

In this example we assume that a customer has an annual subscription that has a flat fee of €365 that is invoiced on Jan 1, 2023 for the period of Jan 1, 2023 to Dec 31, 2023.

The deferred amount is the base amount (invoice amount minus tax). The deferred amount is aggregated by month and will be:

For Jan, 2023: €365 - €31 = €334;
For Feb 2023: €334 - €28 = €306, etc.