While most receivable reporting is straightforward when recognizing revenue and matching expenses in the same period, a few situations require special revenue distribution for long-term projects.

Revenue recognition gives the possibility to partially recognise project sales based on invoicing and expenses expectancy.

Typically, revenue is recognized when the earnings process is complete; however, if a project did not begin work immediately, this could delay recognition of revenue, and expenses accumulated during the period would be unmatched. These unmatched expenses can misstate financial statements (particularly the income statement) and mislead stakeholders. There are also tax implications, where a company may benefit from tax breaks with reduced earnings.

You'll learn:

  • How revenue recognition works

  • Features of revenue recognition

  • Tracking and reporting

Plans & Permissions

Plans: Free CRM, Sales CRM, Project Management, ERP

Permissions: Projects and Revenue Recognition

Table of contents:

1. What is Revenue Recognition?

1.1. Configuration of permissions

1.2 Revenue recognition on a project card

1.3 Duration of a project

1.4 Revenue recognition by month

1.5 Revenue recognition by user

1.6 Tracking revenue recognition

2. Splitting scheduled invoices

1. What is Revenue Recognition?

Project-based and long-lasting production activity challenges companies from different perspectives. Especially, the way profit and loss are processed must be often thought about right when the project starts.

In long-lasting projects, it is important to track revenue and costs monthly. You'll get all the necessary information straight from project management to accounting by registering the revenue and costs to the right month from the start of the project.

1.1. Configuration of permissions

Configure permissions for users/groups to either view or edit in the settings. Permissions are found in the Projects section.

1.2 Revenue Recognition on a project card

Revenue Recognition can be found on the Revenue tab of the project card. In the Sales tab, there are two other tabs: 1. Cost estimate and 2. Revenue Recognition.

Click the icon to go to the Revenue Recognition tool.

1.3 Duration of a project

You can determine the duration of a project in both the project card or in the Revenue Recognition tab on the right-hand side on the top. By changing the time period, the monthly view of the graph and also the months of the Revenue box change accordingly. The duration of the project is in sync and the changes made in the Revenue Recognition tab are updated on the project card as well.

1.4 Revenue Recognition by month

You get to recognise by clicking the Edit button of the Revenue box. The value of a project is the total value of the cost estimate, excluding taxes. Now you can split this number to the selected time period. Directly add the values evenly or configure the months separately.

When the value has been added to the month, you can determine the sales distribution by user either percentage-wise or based on the value.

Tip! You can change the month or the sales dates for all months for reporting from the blue date button.

1.5 Revenue recognition by user

Now that you have added values for the months, you can recognise revenue per user either percentage-wise or based on the value.

The user set as the sales agent is automatically added to the list. Additionally, you can add other team members through the search element. After this you can freely set sales figures per user. The recognised value for the month is the cap that can be split and it is not possible to recognise revenue over that per user.

Note! Revenue can also be left unrecognised. This is necessary, if it is not known who will complete the tasks in the future, or if revenue is even wanted to be split per user.

2. Creating and splitting scheduled invoices

When adding Revenue Recognition, it is possible to create scheduled invoices based on the revenue recognition directly or manually for the sales cycle you want.

Add values and define invoice date from date picker.

Split according to added value or sales revenue

Revenue recognition report

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