Revenue Management: #4 What if there are uncertainties in project or service delivery?

Revenue Management: #4 What if there are uncertainties in project or service delivery?

Our previous post taught us how Zoho Billing makes life easy for businesses with its automated revenue recognition rule. However, certain businesses have more challenges that an automated system cannot handle, and there are certain situations where automated revenue recognition is not feasible. For example, construction services paid in advance but with uncertain start dates can make the revenue recognition rule look inappropriate. Some manual interventions are needed to handle this scenario.

Manual revenue recognition
in Zoho Billing helps you handle these uncertainties. It is used when the timing and amount of revenue cannot be determined accurately through automated rules. This is common in industries such as construction, where project completion is tied to milestones that may occur at irregular intervals.


Example 1:

Imagine a construction firm signs a $50,000 contract to renovate a commercial building. The client pays the entire amount upfront, but the agreement specifies that the revenue will be recognized only as key project stages are completed. Each milestone carries a defined value or percentage of the total contact, say,

  • Design & Approval Phase: $5000

  • Demolition & Site Preparation: 30% of the total contract value

  • Structural & Roofing Work: 40% of the total contract value

  • Interiors & Handover: 100% of the remaining

Milestone

Recognition

Completion Date

Amount Recognized

Design & Approval

Fixed Cost

12/Jan/2025

$5000

Demolition & Site Preparation

30% of the total contract

20/Feb/2025

$15,000

Structural & Roofing Work

40% of the total contract

25/Apr/2025

$20,000

Interior & Handover

100% of the balance

30/Jun/2025

$10,000

Total Revenue Recognized= $50,000


The company ensures that its financial statement accurately reflects real project progress by only reporting revenue when each phase is completed, rather than relying on an automated schedule that may not match the actual work done.

If you look at the revenue recognition report, it will show up like this,


i) Recognized Revenue Report

At the end of the project,

Month

Recognized Revenue

Jan 2025

$5000

Feb 2025

$15,000

Mar 2025

$0

Apr 2025

$20,000

May 2025

$0

Jun 2025

$10,000

Total Recognized

$50,000

 

ii) Deferred Revenue Report

As the project progresses, deferred value gets recognized.

Month

Deferred Revenue

Jan 2025

$45,000

Feb 2025

$30,000

Mar 2025

$30,000

Apr 2025

$10,000

May 2025

$10,000

Jun 2025

$0

 

iii) Revenue Waterfall Report

Billing Date

Total Billed

Jan 2025

Feb 2025

Mar 2025

Apr 2025

May 2025

Jun 2025

Recognized Revenue

Deferred Revenue

Jan 2025

$50,000

$5,000

$15,000

$0

$20,000

$0

$10,000

$50,000

$0

 

The project owner ensures that revenue is recorded accurately only after each milestone is completed, and this is done manually without any specific frequency.


Example 2:

A software consulting firm signs a $120,000 contract to implement an in-house ERP solution with a client. The client pays the amount upfront, but the project involves phases that don't follow uniform timelines/deadlines.

The defined timelines are,

  • Requirement Analysis & Resource Planning: $10,000

  • System Customization: 25% of the total contract

  • Testing & QA: 35% of total contract

  • Deployment & Support: Remaining contract value

 

Milestone

Recognition

Completion Date

Amount Recognized

Requirement Analysis & Planning

Fixed Cost

15/Jan/2025

$10,000

System Customization

25% of the contract value

10/Mar/2025

$30,000

Testing & QA

35% of the contact value

25/May/2025

$42,000

Deployment & Support

100% of the balance

30/Jul/2025

$38,000

Total Revenue Recognized= $120,000

 

When you look at the revenue recognition report for this software deployment, it will show up as follows,


i) Recognized Revenue Report

At the end of the deployment,

Month

Recognized Revenue

Jan 2025

$10,000

Feb 2025

$0

Mar 2025

$30,000

Apr 2025

$0

May 2025

$42,000

Jun 2025

$0

Jul 2025

$38,000

Total Recognized

$120,000

 

ii) Deferred Revenue Report

As the development progresses, deferred value gets recognized.

Month

Deferred Revenue

Jan 2025

$110,000

Feb 2025

$110,000

Mar 2025

$80,000

Apr 2025

$0

May 2025

$38,000

Jun 2025

$38,000

Jul 2025

$0

 

iii) Revenue Waterfall Report

Billing Date

Total Billed

Jan 2025

Feb 2025

Mar 2025

Apr 2025

May 2025

Jun 2025

Jul 2025

Recognized Revenue

Deferred Revenue

Jan 2025

$120,000

$10,000

$0

$30,000

$0

$42,000

$0

$38,000

$120,000

$0

 

Manual revenue recognition is critical when automated rules don't serve the purpose. As we saw through construction and IT consulting examples, Zoho Billing allows businesses to recognize revenue at the right amount and time, ensuring financial statements remain aligned with real project progress.


While we learn the manual recognition process, we will explore these specific industry types in future posts and provide a detailed walk-through of how these businesses record their earnings.

Our next post will start with the SaaS industry, where revenue recognition follows a very different pattern. Unlike milestone-based revenue recognition, SaaS depends more on a recurring billing cycle.

Stay tuned as we explore revenue recognition for SaaS businesses in a few days. 
    • Sticky Posts

    • Community Learning Series | Digest #5 — September 2020

      Dear customers, We're happy to bring you the September edition of our #CommunityDigest! Keep track of your subscription KPIs right from your smartphone: Last month, we enhanced our Android mobile app to help our customers get daily updates on their business health. We got to know from a lot of customers that this has made their job much more easier because they no longer have to keep a reminder to manually check on the previous day's revenue or activations. If you have not downloaded it yet, here's
    • Community Learning Series | Digest #4 - August 2020

      Dear customers, We hope you're staying safe and healthy. I'm happy to bring you the fourth edition of our #CommunityDigest with some brand-new updates from us. 1. Daily Business Updates (for Android users) The Zoho Subscriptions Android app has got a cool new update: You can now get a push notification to your smartphone that lets you know how many activations and cancellations have taken place, and what's the net revenue for the previous day. The best part is, you can tell the app when exactly you
    • Community Learning Series | Digest #3 - July 2020

      Dear customers, We hope you're staying safe and healthy. We're glad to bring you the July edition of our #CommunityDigest. New community members can view our previous newsletters here. This time, we have two major updates and three interesting topics for you: 1. Zoho Subscriptions Developer Community Since the inception of Zoho Subscriptions, our team believed that the recurring billing platform we provide should be able to offer an extensive API library that empowers businesses to automate most
    • Introducing: Community Learning Series | Digest #1 - May 2020

      Dear customers, We hope you are staying safe and healthy. Helping businesses manage their customer subscriptions more efficiently has always been, and always will be, our goal at Zoho Subscriptions. We strongly believe this is possible if we grow together as a community and share what we know with each other. To nurture this shared learning experience, here is our brand-new Community Learning Series! ​ Welcome to the first edition of our digest! Each edition of our community digest includes guides
    • Recent Topics

    • Request to Enable Full DNS Management Access for My Domain

      Hello Zoho Support Team, I have purchased the domain "digimarts365.online" through Zoho, and I need to add A and CNAME records to connect it with my Shopify store. However, DNS Toolkit is not allowing me to edit or add any records. Kindly enable full
    • Backup flow, see change log / history

      Hello, I would like to know, how flows can be saved, copied and tracked. If I work on a Flow with multiple other colleagues we need to see the Changes made by others. Is there a history, changelog or something else? Also we need to backup/import flows
    • Problème de validation du domaine spelam.ma

      Bonjour équipe Zoho, J’ai l’honneur de vous contacter car je rencontre un problème technique au niveau de la validation de mon compte ou de mon domaine spelam.ma. En effet, j’ai déjà acheté le domaine, mais la validation ne semble pas être correctement
    • Critical:- Eneble TDS filing for 26Q from the zoho book

      We currently extract TDS data from Zoho Books and manually input it into a separate TDS software to generate the FUV file and file returns. Previously, while using Tally, we benefited from an integrated feature that seamlessly recorded transactions and
    • Add a way of clearing fields values in Flow actions

      It would be great if there was an option to set a field as Null when creating flows. I had an instance today where I just wanted to clear a long integer field in the CRM based on an action in Projects but I had to write a custom function. It would be
    • Writer loads as a blank page.

      Hi, I'm new to zoho but I liked the idea of an online wordprocessor that I can use from multiple computers. I signed up a few hours ago while at work where our computers use Linus Ubuntu and a Firefox browser and the Writer came up fine. Now I'm home and using my Windows machine with Norton Firewall and Firefox and the writer opens as a blank page. I've checked my security options in both Firefox & Norton and I have received all the cookies from Zoho. What gives?
    • Ensure Consistent Service Delivery with Comprehensive Job Sheets

      We are elated to announce that one of the most requested features is now live: Job Sheets. They are customizable, reusable forms that serve as a checklist for the services that technicians need to carry out and as a tool for data collection. While on
    • Turning off the new UI

      Tried the new 'enhanced' UI and actively dislike it. Anyone know how to revert back?
    • JOB Sheet can not send PDF as service rapports and more info needed other topic

      Goedendag, - Jullie hebben nu job sheet erin gedaan en dar is echt super goed, enkel kunnen we de werkbon ( JOB sheet) nu niet verzenden als PDF als een service rapport naar onze hoofdaannemer hoe we dat nu doen als bewijs van de levering van het werk
    • Publish a single Sheet stopped working

      I used to have a published sheet on my Zoho Spreadsheet and that stopped working. If I want to publish it again, I only get the message that says "Published externally", but that does nothing, and if I change tabs and come back, the sheet gives me the
    • Does Zoho Contracts support white-labeling?

      As the title says, do you provide us white-labeling solution?
    • Constantly getting error 429 "Too Many Requests" despite not sending many requests.

      I am currently working on developing an integration between our company's app and our zoho books setup using the api. When testing new functionality, I am very often having the calls fail with Error 429 'You have made too many requests continuously. Please
    • Not receiving emails

      I'm able to send emails, but I can't receive any. Please help
    • Capturing knowledge across many channels

      We actively use Cliq for client discussions, product management etc. Often there are great answers to questions or key announcements. We have no way to tag or capture them along the way. Pinning only gets us so far. For example, imagine a product channel
    • Prepayment of a sales order

      How does everyone handle this common (at least it is common for us!) situation? We require all our orders to be fully prepaid before shipment since we manufacture made to order, custom products. Since ZOHO does not allow a sales order to be prepaid, we are forced to create an invoice at the time an order is placed to allow the customer to pay it. Our sales category is therefore skewed, since the sale was actually booked at the time an order was placed, rather then at the time it is shipped, which
    • Zoho Campaigns Account Keeps Shutting Down

      Hey hey, I am completely at a loss here. For months we have been back and forth with Zoho Campaigns Support on Spam Trap hits. Each time they can never provide us with a full list of emails, only 1 here or there. So internally we have setup a integration
    • Need a way to run a client script longet than 10 seconds

      By The Grace of G-D. Hi, Currently, Client Scripts are Timing out at 10 seconds. We have complex logics that needs more time. Can you add a feature request to increase the timeout?
    • Last activity time is acting like last modified time

      When i edit the description or any field in the potential, account, contact and lead, the Last Activity Time is being updated like the Modified Time. This is messing all workflows and reports and we are unable to track real last time of activities like mentioned in this KB article http://crmkbase.zoho.com/what-is-the-difference-between-record-modified-time-and-record-last-activity-time
    • Can multiple agents be assigned to one ticket on purpose?

      Is it possible to assign one ticket to two or more agents at a time? I would like the option to have multiple people working on one ticket so that the same ticket is viewable for those agents on their list of pending tickets. Is something like this currently
    • What’s New in 2025 (So Far)

      Hey Recruiters, We’ve wrapped up the first half of 2025 with a few focused enhancements in Zoho Recruit—all aimed at simplifying your day-to-day recruitment tasks. Here’s a quick video that walks you through what’s new so far this year: Here’s a brief
    • Zoho Pagesense really this slow??? 5s delay...

      I put the pagesense on my website (hosted by webflow and fast) and it caused a 5s delay to load. do other people face similar delays?
    • Multi-Department Approval for a Single Bill in Zoho Books

      Hello everyone, Hope you're all doing well. I’d like to ask if anyone has found a good workaround for the following scenario in Zoho Books: Let’s say a corporate credit card bill or vendor invoice covers multiple purchases across different projects or
    • Zoho Landing Page "Something went wrong" Error

      Hello, Every time I try to create a new landing page, I receive a "Something went wrong" error with no explanation. I cannot create any new pages, which means we cannot use this application. I did create one landing page successfully over a month ago,
    • Composite items are not seen in zoho commerce

      Composite items are not seen in zoho commerce. Are you scheduled to fix this error?
    • not able to access Zoho from home WIFI

      for some reasone i am not able to access Zoho on my laptop or my iphone while i am connected to my home Wifi, i am able to access these sites both on laptop as well as Iphone and associated apps on any other Wifi as well as when I am on my 4G connection
    • Zoho Books for Service Enterproses

      I would like to know how to use Zoho Books for services such as car rental, travel agency, and hotel services. I notice that Zoho Books is good for goods, but for services, it's very difficult to track the profit or loss on each invoice. I need to capture
    • Email Relay in Zoho Books

      I have set up the email relay in Zoho books and the SMTP test was successful. However, I can't figure out how to sent the POs and invoices via the relay so the copy of the message shows in google workspace sent mail. Any guidance is appreciated
    • E-invoicing/Facturacion Electronica in Peru, SUNAT authority

      Hi Zoho, you are promoting your product very actively in south america as well as in Peru, but since few years there is an obligation for e-invoicing, transmitting information directly to peruvian tax authority SUNAT. Do you have any solution for this?
    • Project Accounting

      Hello Zoho, Can we also bring project accounting in Zohobooks as a ne feature in upcoming developments? This will be helpful for specific business and industries. Thanks
    • Accounts Payable

      hi there  i am using the free version to trial the software. I am working on the acrual basis. When i received a vendor invoice, it gets keyed into the systems as an unpaid invoice as the payment to from the vendor is 14 days. the unpaid invoice does
    • Approval Processes "Record Modification"

      I didn't find any information about the "Record Modification" item in Zoho articles and Tutorials. I see that this item didn't exist a year ago. Help understand how it works, I tested it and didn't see any difference between "all fields" and "no fie
    • How do i add another purchase information heading?

      i would like to add another section right here to enter an amount which then link directly to the cost of goods sold account
    • Help with Zoho CRM API Integration in C# WinForms (Token Generation Issue)

      Hi everyone, I need your help with integrating the Zoho CRM API into a C# desktop application. My goal is to build a WinForms app in Visual Studio that does the following: Fetch the full list of client projects (module: Deals) and display them in a searchable
    • Can we share the URL of My zoho Sheets on other websites?

      Hello everyone? I have sheets on Zoho and I want to share them on other websites like daraz, homeshopping, gepco duplicate bills, etc. I don't have much knowledge about online sharing question forums? I am a student and have a short survey about online
    • Add Support to Upload Inventory Items with Categories or Enable Separate Upload for Inventory Categories

      Currently, Zoho Inventory does not support uploading new items along with their parent and sub inventory categories using the item import feature. This creates challenges for businesses with structured inventory hierarchies when trying to upload items
    • in zoho books while categorizing need to add new name in category by replacing expanses how to edit or make changes need assistance

    • Tip of the Week #62– Use @mentions to loop in teammates.

      Ever been stuck on a customer query because you needed input from someone else on your team? Maybe you were unsure about a refund policy or needed help answering a technical question. So you forward the message … and wait. Or worse, you forget to follow
    • Suggestions for Kiosk Functionality Improvements in Zoho People

      Hello Zoho Team, I’d like to share some feedback and suggestions regarding the Kiosk functionality in Zoho People, as there are two important points that affect user experience and compliance: Visual Confirmation of Check-In Status It would be extremely
    • Needs Separate Permissions levels for Record Attachments

      Currently in Zoho Books Record attachments are tied to the general permission level For example if a role don't have the delete permission level they cannot delete the attachment as well If a role doesn't have the edit permission they cannot upload the
    • Zoho Books integration with Google workspace

      How do I integrate Zoho books with Google Workspace? The steps outlined on the Zoho help sections do not correspond to the actual user interface in Google Workspace. Zoho books is installed on admin level for all users, all users can access it from the
    • Next Page