Why Revenue Recognition?
Why Zuora's Revenue Recognition? Find out how our Zuora Finance Revenue Recognition is designed to manage your recurring revenue.
Zuora Finance: Manage Recurring Revenue
Revenue Recognition determines when revenue can be recognized for a service. Revenue recognition follows the basic principle that revenue can be recognized when a service has been provided and when you are likely to receive payment for that service.
Recognizing revenue in a subscription business model introduces new challenges
1 | Your revenues are constantly changing with subscription lifecycle events | Customer upgrades, downgrades, and amendments affect subscription revenue schedules, and your business needs to maintain a real-time and up-to-date snapshot of revenues. |
2 | Your revenue recognition is complex | Your subscription pricing models result in complex revenue recognition processes which, without automation, lead to countless hours of manual processes and audit risk. |
Zuora Finance lets you automate revenue distribution and stay up-to-date on subscription revenue schedules
Automate revenue recognition with a combination of out-of-the-box recognition models that require no coding and an extensible API framework for complex requirements. |
Easily create and configure separate revenue recognition rules for different products. |
Automatically have revenue schedules adjusted as changes occur in the subscription lifecycle. |
View revenue schedules in real-time while having the flexibility to manually distribute revenue across accounting periods. |
View deferred and earned revenue summaries in Zuora and run reports for additional details. |
Maintain an audit trail by tracking and reporting on all changes made to revenue. |
Key Features
Revenue Recognition offers:
- Revenue schedules auto-created on single charges.
- Subscription-aware revenue recognition.
- No manual effort to handle changes to subscriptions.
- Flexible revenue rule models that you can configure to fit your business model and accounting practices.
- Manual distribution to handle ad-hoc adjustments to revenue schedules, such as adjusting the revenue schedule for milestone-based professional services.
- Accounting metrics calculated on the revenue schedule include: recognized revenue, deferred revenue, and revenue backlog (pending revenue).
- Revenue Workbench to help you manage undistributed revenue on subscription charges.
- Data source export to handle your revenue recognition reporting needs. See the following data sources:
- Accounting Period Revenue Detail report to export revenue data for accounting close or auditing purposes.
- Zuora Finance roles and permissions to restrict who manages revenue schedules and rules.
- REST APIs are used to implement the most complex revenue recognition scenarios. The following REST API resources are available:
Common Scenarios
Common scenarios of revenue recognition include:
Billing-based policy
Revenue is recognized upon sending the invoice, which is a billing-based policy. For example invoicing $300 for January through March results in $100 of revenue recognition for each month in the three-month period. A delay in recognition could occur, such as when payment receipt is past due or service activation date is pushed out.
Custom revenue schedule
Any number of custom scenarios where you would like to have complete control over your revenue recognition.