Finance & Billing
Definition
Revenue recognition is the accounting principle determining when revenue from a customer contract can be recognized. For subscription businesses, revenue is typically recognized ratably over the service period, not at invoicing. ASC 606 and IFRS 15 standardize revenue recognition across reporting regimes.
Key points
- Subscription revenue typically recognized ratably over contract period
- Deferred revenue = contract billed but not yet recognized
- Services and one-time fees recognized per-delivery
- ASC 606 (US GAAP) and IFRS 15 are current standards
Example
Customer signs $12k annual contract, pays upfront. At signing: $12k deferred revenue booked. Each month: $1k recognized as revenue, $1k removed from deferred.
Related terms
Stop stitching tools to track this
KamoCRM unifies CRM, communications, and operations — the metrics this term describes become live dashboards in your workspace.