Revenue Recognition – common methods used

costingIn a previous article we went into detail about what Revenue Recognition is and why it is necessary.

At a practical level what are the common methods of recognising revenue and how can this be achieved from an administrative perspective?

In the previous article mentioned above we stated that:

“Revenue is to be recognised over the period in which the services were performed. This is fairly straightforward for services provided on a Time and Material basis.”

“When a project involves delivery of a product that has required services to develop the product, e.g. software, and the provision of services to the project can be estimated reliably, revenue associated with the project shall be recognised by reference to the stage of completion of the project at the end of the reporting period.” read more

Supercharged Invoices

invoicecredit entryThe days of the plain old invoice are gone. Today’s customers can be very demanding when it comes to the invoices they receive. And let’s face it they have a reasonable amount of clout when it comes to getting their demands met. Delaying payment can be a great motivator to giving the customer what they want.

Ideally then vendors should agree with the customer up front as part of the sales process any specific requirements they have for invoicing. This will allow time for the vendor to ensure that the invoice process and more importantly payments are not held up due to problems meeting these requirements. read more