Revenue Management: #10 Common Mistakes while Recognizing Revenue

We are at the end of the series on Revenue Management, covering how different businesses recognise revenue. Even with clear standards like ASC 606 and IFRS 15 in practice, businesses often struggle with the nuances of revenue recognition. Especially growing businesses that are so keen on scaling take a wrong foot.

Where do businesses often go wrong, and how can they avoid it? 

Here are some of the common mistakes businesses make and suggestions for avoiding them before they cause us harm.

Recognizing Revenue Early

A common mistake is recording the full value of a contract or an invoice as recognized immediately upon payment, especially for services or subscriptions delivered over time. This inflates revenue in the short term and understates liabilities.

To avoid this, Businesses should ensure revenue is recognized only when performance obligations are met, not when billing or cash collection. This avoids overstating earnings in the short term and ensures compliance with ASC 606/IFRS 15. Deferred revenue schedules and automated recognition tools can help align recognition with delivery.

Ignoring Performance Obligation

Many companies fail to separate multiple deliverables in a contract, such as onboarding, training, support, or updates. This results in an improper allocation of revenue across the contract's life.

Contracts often include multiple deliverables, such as onboarding, training, or ongoing support. Each should be treated as a separate performance obligation, and revenue should be allocated based on its standalone selling price.

Overlooking Discounts

Revenue must be recognized based on the actual transaction price, not the list price. Failing to adjust the discounts, credits, or rewards provided will inflate the financial figures.

To overcome this, Revenue must be recorded at the true transaction price, not the list price. Discounts, reductions, credits, and incentives should be factored in from the start, and estimates for variable consideration should be reassessed periodically. This ensures reported revenue reflects the real value of the customer contracts.

Failing to Update Contract Amendments

Mid-term changes like upgrades, downgrades, or cancellations must be tracked properly. A reassessment must be performed based on the revised obligations and the revenue that remains deferred. Many companies fail to do this or skip this recalibration step.

Upgrades, downgrades, extensions, or cancellations require proper revenue reassessment. Businesses should clearly distinguish whether a change creates a new contract or modifies the existing one. Automated systems that recalculate deferred balances can simplify this process and ensure accurate reporting.

Manual Spreadsheets

Racking revenue manually through spreadsheets increases the risk of errors, especially when managing deferrals, returns, or variable billing models. Automating this process with tools like Zoho Billing ensures accurate, hassle-free recognition with audit-ready reporting.

Manual spreadsheets are prone to errors and limit scalability. Adopting automated revenue recognition software ensures accuracy and reduces compliance risk. Strong internal policies, approval workflows, and finance team training enhance accuracy and reliability. 

Key Takeaway

With the right processes and tools, these challenges can be avoided. Businesses that invest in automation and adopt best practices early on will be better positioned to scale sustainably while maintaining compliance with recognition standards. 

Zoho Billing is designed to simplify revenue management by automating recognition, tracking contract changes, handling deferred revenue schedules, and ensuring audit-ready compliance. It provides the accuracy, transparency and scalability needed for growing businesses to keep revenue recognition on the right foot. 

​

• Topic Participants

• Hari Hara Sudhan. S

  

• 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

• Automated Dismissal of Specific Notifications and Centralized Control of Toast Notification Settings

  Dear Zoho Team, I hope this message finds you well. We would like to request two enhancements related to notification handling within Zoho Desk: Automatic Dismissal of Specific Notifications: Currently, when certain actions are taken in the ticket list

• Intergrating multi location Square account with Zoho Books

  Hi, I have one Square account but has multiple locations. I would like to integrate that account and show aggregated sales in zoho books. How can I do that? thanks.

• Zoho Learn Zapier Integration

  Hello all, Is there any plan to integrate Zoho Learn with Zapier? It seems almost all Zoho products are in Zapier, with the exception of Learn and Marketing Automation.

• Notice: SalesIQ integration paused on Zoho Sites

  I have this notice on my Zoho Sites in the SalesIQ integration setup. Can someone assist? "This integration has been temporarily paused for users. Reconnecting SalesIQ after disconnection will not be possible until we provide further updates." thank

• How to remove chat icon from knowledge base?

  I have set up a knowledge base to hold FAQs and documentation. It is currently standalone, and not integrated into our website. On every page there is a chat button in the bottom left corner that says "We're offline, please leave a message." How can I

• Differences between Zoho Books and Zoho Billing

  Without a long drawn out process to compare these. If you were looking at these Books and Billing, what made you opt for one and not the other. Thanks

• New Feature : Copying tickets with all the contents such as conversations/history/attachments etc

  Sometimes our customers and distributors do create tickets (or send emails) which contain more than one incident in them and then also some of the further conversations which are either created by incorrect new tickets or replies to old tickets are being created as combined tickets. In such cases we require to "COPY" the contents of the tickets into separate tickets and merge them into their corresponding original tickets. The "CLONE" feature doesn't copy the contents (especially the conversations

• Como se agregan los empleados

  Necesito saber si para agregar empleados los mismos necesitan tener licencias

• Deluge Error Code 1002 - "Resource does not exist."

  I am using the following script in a Custom Button on a Sales Return. Basically, the function takes the information in the sales return (plus the arguments that are entered by the user when the button is pushed) and creates a return shipping label via

• Adding multiple Attendee email addresses when adding a Zoho Calendar event in Zoho Flow

  I am trying to integrate Notion and Zoho Calendar via Zoho Flow. However, the Attendee email address supported by Zoho Calendar - Create event only supports one email address, so I am having difficulty implementing automation to automatically register

• Deprecation of SMS-based multi-factor authentication (MFA) mode

  Overview of SMS-based OTP MFA mode The SMS-based OTP MFA method involves the delivery of a one-time password to a user's mobile phone via SMS. The user receives the OTP on their mobile phone and enters it to sign into their account. SMS-based OTPs offer

• Books & Desk. Client mapping

  Hi, I’ve been using Zoho Books for several years and am now looking to improve my customer service. I'm experimenting with Zoho Desk and want to sync and map my client data from Zoho Books. However, it seems that mapping requires both contacts to have

• Graceful Handling of Exceeded Option Limits

  Hi Zoho SalesIQ team. I would like to submit a feature request to deal with a bug in salesIQ Current Behavior (Bug): When a dynamic list passed to the Single Select Option Card contains more than 20 options, the Zobot stops responding (freezes/hangs)

• System default SLA descriptions can't be modified

  The system default SLAs have identical descriptions for all SLA levels, but their settings differ. However, I am facing an issue where I cannot modify these descriptions and save the changes. The content of the description box can be edited but the changes

• Adding non-Indian billing address for my Zoho subscription

  Hey Need help with adding a non-Indian billing address for my Zoho subscription, trying to edit the address to my Singapore registered company. Won't let me change the country. Would appreciate the help. Regards, Rishabh

• Show field in spreadsheet view depending on other field value

  Hello. Not sure if this is possible but let's say i have spreadsheet view in Creator with four different fields Field A, B, C and D Then i have a field named Response which for one record could contain only one of the pre-definde choices below A, B, C

• Zoho Desk - Zoho FSM Integration issue on Mobile and iPad

  Hello Team, I am trying to create a Work Order (WO) using the Zoho FSM integration (Add-on Service) that is integrated with Zoho Desk. The issue is that the integration is not working on mobile devices and iPads. While I am able to create the WO, Request,

• How to create one ZohoCRM organisation out of a multi-organization?

  Hi, we have a multi-org including two different Zoho CRM organizations for two companies using respectively EUR and USD as default currency. I was wondering if there is any easy way to merge the two organizations into just one, so that users may access

• Increase the "Maximum Saved Entries per User" Options Limit

  Hi, You can create lots of saved entries, yet the Limit when you apply one is 25, we may often expect 32 to be in draft, and therefore want to enforce that, can we increase the limit of this field from 25 to 100 (As you can just turn it off and have more

• Gray screen while signing documents

  We are all getting a "gray" screen when trying to sign documents in Zoho sign. Anyone else having issues?

• Reassign Partially Saved Entries

  Hi, I would like to be able to go to Partially Saved Entries and like the option to delete them I would like the option to multi-select and be able to reassign them to another user to complete (Such as when a user has left the company). Thanks Dan

• Improved Integration Failure Information (And Notification Options)

  Hi, When an attachment service for example fails, you just get "Field x - Error", I can check the field it is failing on and find nothing wrong, same file size, type, dimensions, etc. so more information as to the actual issue would be helpful. And an

• Set Frozen Cells in the Report Settings

  Hi, It would be nice to be able to set the frozen cells in the report Settings, and have an option if this is fixed or can be changed after loading (On the next load it still goes back to the Settings). Thanks Dan

• Link Purchase Order to Deal

  Zoho Books directly syncs with contacts, vendors and products in Zoho CRM including field mapping. Is there any way to associate vendor purchase orders with deals, so that we can calculate our profit margin for each deal with connected sales invoices

• Projects custom colors replaced by default orange

  Since yesterday, projects uploaded to Zoho, to which I had assigned a custom color, have lost the customization and reverted to the default color (orange). Has anyone else had the same problem? If so, how did you resolve it?

• Interview booked through Invite but no Notifications

  We have a workflow that was developed through a developer/partner that was tested and worked. Today, we pushed a candidate through the process and invited them to an in-office interview. They were sent the booking link (as usual and as tested before successfully)

• Knowledgebase SEO

  We have a custom-domain mapped help center that is not restricted via login. I have some questions: a) will a robots.txt file still allow us to control indexing? b) do we have the ability to edit the sitemap? c) do category URLs get indexed by search

• Improve WhatsApp Module in Zoho CRM

  The current WhatsApp module UI in Zoho CRM feels cluttered and complex, especially when handling high volumes of conversations. It would be great to enhance the WhatsApp module UI/UX by adopting a clean and simplified interface similar to Bigin CRM’s

• Automatiser la gestion des SLA dans Zoho Desk avec Zoho Contracts

  Les équipes du service client s’efforcent d’assurer un support rapide, régulier et fiable pour garantir la satisfaction de chaque client. Les accords de niveau de service (SLA) permettent de clarifier les engagements en définissant les termes et conditions

• Create static subforms in Zoho CRM: streamline data entry with pre-defined values

  Last modified on (9 July, 2025): This feature was available in early access and is currently being rolled out to customers in phases. Currently available for users in the the AU, CA, and SA DCs. It will be enabled for the remaining DCs in the next couple

• iOS App doesn't refresh for Document Creation

  Hello Zoho team, I have created a workflow to be used on a mobile iOS device which starts in Zoho Creater and ends with a murge and store function that then opens the newly created document within the Zoho Writer app. This process is working great however

• Easier onboarding for new users with stage descriptions

  Greetings, I hope all of you are doing well. We're happy to announce a recent enhancement we've made to Bigin. You can now add descriptions to the stages in your pipeline. Previously, when creating a pipeline, you could only add stages. With this update,

• Dynamic Field Folders in OneDrive

  Hi, With the 2 options today we have either a Dynamic Parent Folder and lots of attachments all in that one folder with only the ability to set the file name (Which is also not incremented so if I upload 5 photos to one field they are all named the same

• Is it possible to transfer data from one related list to another within the same module ?

  In the Leads module, there is an existing default Product related list that already contains data. Recently, I added a custom multi-lookup field, which created a new related list in the same Leads module. Now, I need to move the existing data from the

• Uploading a signed template from Sign to Creator

  Good day, Please help me on how to load a signed document back into Creator after the process has been completed in Sign. Below is the code that I am trying, pdfFile = response.toFile("SignedDocument_4901354000000372029.pdf"); info pdfFile; // Attach

• Consolidated Department-wise Payroll Cost Summary Report

  Hello Zoho Payroll Team and Community, I am writing to discuss a reporting requirement regarding department-level expense tracking within Zoho Payroll. As we scale and manage salary distribution for employees across multiple departments, such as Accounts,

• Zoho DataPrep and File Pattern configuration

  I'm using Zoho data prep to ingest data from One Drive into Zoho Analytics... The pipeline is super simple but I can't any way to get all the files that I need. Basically I need to bring all the files with a certain pattern and for that I'm using a regex

• Change User Role in a Form

  Hi, When in a form, it would be good (And consistent) to be able to change the user role/permission like you can with Shared Reports, All Entries or the actual User itself, rather than having to delete the users permission and then add it back again with

• Assistance needed: Activation of a domain

  Hello Zoho Support, I purchased the .com domain "primesolva.com" via Zoho 6 days ago. The domain is still pending, and I cannot access the DNS panel to add the TXT verification for domain ownership. Please confirm the registration status and help me activate

• Operation not permitted

  I am trying to add an email address to the list of user but I am getting error Operation not permitted

• Next Page