Revenue Recognition & Management
Revenue Recognition & Management
The Revenue Recognition & Management module automates the calculation, scheduling, and posting of revenue in compliance with ASC 606 (US GAAP) and IFRS 15 (international). This page describes how the feature works, its key components, and how to use it.
Overview
Revenue recognition rules under ASC 606 / IFRS 15 require organisations to recognise revenue in a way that reflects the transfer of promised goods or services to customers. The platform automates the five-step model:
- Identify the contract with a customer.
- Identify the performance obligations in the contract.
- Determine the transaction price.
- Allocate the transaction price to the performance obligations.
- Recognise revenue when (or as) each performance obligation is satisfied.
Key Features
Performance Obligations
Performance obligations represent distinct promises within a contract — for example, a software licence, an implementation service, and an annual support plan bundled into a single agreement.
- Add one or more performance obligations to any contract.
- Specify whether each obligation is satisfied at a point in time or over time.
- Track the satisfaction status of each obligation independently.
Transaction Price Allocation
The system allocates the contract's total transaction price across all performance obligations based on their relative standalone selling prices (SSPs).
- Configure SSPs per product or service.
- Supports variable consideration (e.g. discounts, rebates, refund liabilities).
- Handles bundled and multi-element arrangements automatically.
Recognition Methods
| Method | Description |
|---|---|
| Point-in-Time | Revenue is recognised at a defined event — e.g. delivery, customer acceptance, or invoice date. |
| Over Time (Straight-Line) | Revenue is spread evenly across the service period. |
| Over Time (Input/Output Method) | Revenue is recognised based on progress toward satisfying the obligation (e.g. milestones, units delivered). |
Automated Revenue Schedules
Once a contract and its performance obligations are configured, the system generates a forward-looking revenue schedule automatically. Schedules:
- Display recognised and deferred revenue by period.
- Update in real time when contract terms change (e.g. amendments, renewals).
- Feed directly into the general ledger via automated journal entries.
Audit-Ready Reporting
All recognition events are logged with full traceability, including:
- The performance obligation satisfied.
- The amount recognised and the remaining deferred balance.
- The triggering event or date.
- The corresponding journal entry reference.
Schedules can be exported in standard formats for external auditor review and financial close packages.
Getting Started
1. Configure Standalone Selling Prices
Before creating revenue-recognised contracts, define SSPs for each product or service offering in Settings → Revenue → Standalone Selling Prices.
2. Create a Contract
Navigate to Finance → Revenue → Contracts and create a new contract. Specify:
- Customer
- Contract start and end dates
- Total transaction price
- Accounting standard (ASC 606 or IFRS 15)
3. Add Performance Obligations
Within the contract, add each distinct performance obligation. For each obligation:
- Select the product/service.
- Set the recognition method (point-in-time or over time).
- Define the satisfaction event or service period.
4. Allocate Transaction Price
The system calculates and displays the allocated amount for each performance obligation based on SSPs. Review and confirm the allocation.
5. Review the Revenue Schedule
Once confirmed, a revenue schedule is generated automatically. Access it from the contract detail page under the Revenue Schedule tab. The schedule shows:
- Recognised revenue by period
- Deferred revenue balance
- Upcoming recognition events
6. Export Audit Schedules
From the Revenue Schedule tab, click Export to download an audit-ready schedule. Available formats include PDF and CSV.
Compliance Notes
- ASC 606 applies to US GAAP reporters. Effective for public entities since 2018 and private entities since 2019.
- IFRS 15 is the international equivalent, effective from January 2018.
- Both standards share the same five-step model; the platform handles the technical differences in disclosure and presentation automatically based on the selected standard per contract.