Revenue Recognition

Alguna automates revenue recognition to help you comply with ASC 606 and IFRS 15 accounting standards. Revenue is recognized over the service period, not when cash is received.

How Revenue Recognition Works

When you bill a customer upfront for a service period, you don’t earn all that revenue immediately. Instead, revenue is recognized (earned) as you deliver the service over time.

When	What Happens
Invoice Issued	Customer is billed, creates Accounts Receivable and Deferred Revenue
Each Month	Portion of Deferred Revenue moves to Recognized Revenue
Payment Received	Cash replaces Accounts Receivable (no revenue impact)

Revenue Recognition Timing

Subscription Revenue

Revenue is recognized evenly over the service period:

Billing Type	Service Period	How Revenue Is Recognized
Annual upfront ($1,200)	12 months	$100 per month
Quarterly upfront ($300)	3 months	$100 per month
Monthly ($100)	1 month	$100 in the month

Example: $1,200 Annual Subscription Starting January 1

Month	Revenue Recognized	Cumulative Recognized	Remaining Deferred
January	$100	$100	$1,100
February	$100	$200	$1,000
March	$100	$300	$900
April	$100	$400	$800
…	…	…	…
December	$100	$1,200	$0

Usage-Based Revenue

Usage revenue is recognized when usage occurs—no deferral needed.

Month	Usage	Rate	Revenue Recognized
January	10,000 API calls	$0.01/call	$100
February	15,000 API calls	$0.01/call	$150
March	8,000 API calls	$0.01/call	$80

Viewing Revenue Schedules

In the Dashboard

Navigate to Reports → Revenue Recognition
Select the time period
View:
- Recognized revenue by period
- Deferred revenue balance
- Revenue by product or customer

Revenue Schedule Example

For a $1,200 annual subscription billed January 1:

Subscription	Customer	Total Amount	Recognized (Q1)	Deferred (as of Mar 31)
SUB-001	Acme Corp	$1,200	$300	$900
SUB-002	Globex Inc	$2,400	$600	$1,800
SUB-003	TechStart	$600	$150	$450
Total		$4,200	$1,050	$3,150

Deferred Revenue

Deferred revenue (also called unearned revenue) represents cash you’ve collected but haven’t yet earned.

Deferred Revenue Report

Navigate to Reports → Deferred Revenue to see your balance:

As of Date	Total Deferred	Due in 30 Days	Due in 60 Days	Due in 90+ Days
Mar 31, 2024	$450,000	$50,000	$48,000	$352,000

Deferred Revenue by Period

Recognition Month	Amount to Recognize
April 2024	$50,000
May 2024	$48,000
June 2024	$47,000
July 2024	$45,000
…	…

Journal Entries

Alguna automatically generates the accounting entries for revenue recognition.

When Invoice Is Issued

Account	Debit	Credit
Accounts Receivable	$1,200
Deferred Revenue		$1,200

Monthly Recognition (Each Month)

Account	Debit	Credit
Deferred Revenue	$100
Revenue		$100

When Payment Is Received

Account	Debit	Credit
Cash	$1,200
Accounts Receivable		$1,200

Multi-Currency Revenue

For subscriptions billed in foreign currencies, revenue is recognized in your functional (reporting) currency.

How FX Is Handled

Setting	Description
Invoice Currency	Customer’s currency (e.g., EUR)
Functional Currency	Your reporting currency (e.g., USD)
FX Rate Locked	At invoice date (configurable)

Example: EUR Invoice with USD Reporting

	EUR	USD (at 1.10 rate)
Invoice Amount	€1,000	$1,100
Monthly Recognition	€83.33	$91.67

Revenue Reports

Monthly Revenue Report

Navigate to Reports → Revenue to view:

Product	Recognized Revenue	% of Total
Platform Pro	$80,000	64%
Premium Support	$35,000	28%
Implementation	$10,000	8%
Total	$125,000	100%

Revenue by Customer

Customer	MRR	Recognized This Month
Acme Corp	$5,000	$5,000
Globex Inc	$3,500	$3,500
TechStart	$2,000	$2,000

Handling Changes

Subscription Upgrades

When a customer upgrades mid-period:

Remaining deferred revenue from old plan is adjusted
New revenue schedule created for the upgrade
Proration creates incremental revenue items

Cancellations

When a subscription is canceled:

Remaining deferred revenue is reversed (if refunding)
Or recognized immediately (if no refund)
Final journal entries are generated

Amendments

Mid-term changes create amendment revenue schedules that align with the original schedule dates.

Exporting Revenue Data

Export to Accounting System

Navigate to Settings → Integrations
Connect QuickBooks, Xero, or NetSuite
Revenue entries sync automatically

Manual Export

Navigate to Reports → Revenue Recognition
Select the period
Click Export to download CSV

Configuration

Recognition Method

Configure in Settings → Revenue Recognition:

Method	When to Use
Straight-line	Recognize evenly over service period (default)
Usage-based	Recognize as usage occurs
Point-in-time	Recognize immediately (setup fees)

Product-Level Settings

Override the default method for specific products:

Navigate to Products → [Product]
Under Revenue Recognition:
- Set recognition method
- Set timing (service start, invoice date)
Save

Best Practices

Monthly Close

Run revenue recognition before monthly close.

Audit Trail

All changes are tracked with full audit history.

Reconciliation

Reconcile deferred revenue to your general ledger monthly.

Multi-Currency

Lock FX rates at invoice date for consistency.

Next Steps

Accounting Integration

Sync with your accounting system.

Reports

View revenue dashboards.

​Revenue Recognition

​How Revenue Recognition Works

​Revenue Recognition Timing

​Subscription Revenue

​Usage-Based Revenue

​Viewing Revenue Schedules

​In the Dashboard

​Revenue Schedule Example

​Deferred Revenue

​Deferred Revenue Report

​Deferred Revenue by Period

​Journal Entries

​When Invoice Is Issued

​Monthly Recognition (Each Month)

​When Payment Is Received

​Multi-Currency Revenue

​How FX Is Handled

​Example: EUR Invoice with USD Reporting

​Revenue Reports

​Monthly Revenue Report

​Revenue by Customer

​Handling Changes

​Subscription Upgrades

​Cancellations

​Amendments

​Exporting Revenue Data

​Export to Accounting System

​Manual Export

​Configuration

​Recognition Method

​Product-Level Settings

​Best Practices