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

• How to charge Convenience fee OR payment gateway charges to the end client who is paying the invoice?

  Hello, I am creating this topic after having discussions with various sets of users and have understood that with people moving more and more to digital payments, it is important for the client to enable the "Convenience fee" kind of scenario. I have

• Card payment surcharge?

  Hi, I would like to offer my customers the ability to pay invoices by card (using the PayPal integration). However, PayPal charges me around 5% to receive a card payment, and I would like to pass on this cost to my customer by way of a card payment surcharge. Is there any way for Zoho Invoice to be set up to automatically add a defined "card processing fee", say 5% of the invoice total, if the customer elects to pay by card? I don't want to add this on to invoice manually, since most of my clients

• Zoho Books | Product updates | January 2026

  Hello users, We’ve rolled out new features and enhancements in Zoho Books. From e-filing Form 1099 directly with the IRS to corporation tax support, explore the updates designed to enhance your bookkeeping experience. E-File Form 1099 Directly With the

• Zoho POS App Hanging Issue – Sales Becoming Difficult

  The Zoho POS app frequently hangs and becomes unresponsive during billing, making it very difficult to complete sales smoothly. This commonly happens while adding items, during checkout, or at payment time, especially during peak hours. These issues cause

• Tip #62- Exploring Technician Console: Send Ctrl + Alt + Del- 'Insider Insights'

  Hello Zoho Assist Community! This week, we’ll be exploring the Send Ctrl + Alt + Del option in the Technician Console. Let’s jump right in. System administrators often rely on Ctrl + Alt + Del when managing remote devices that have unresponsive applications

• SKUs for Invoices, POs, etc.

  It doesn't appear that one can enable SKU display on invoices, POs, etc. This is problematic, and I don't see a good reason why this shouldn't be an option. Some of our vendors and customers use this in their system. Every other identifier code is available

• how to avoid duplicate customer

  How can i avoid to create a duplicate customer. I charged a same customer with two different plans and it showed up twice in my customer list and subsequently in Zoho books contacts. It creates confusion to have a same customer appears multiple times in customer or contact list. How can i avoid it.

• RSC Connectivity Linkedin Recruiter RPS

  It seems there's a bit of a push from Linkedin Talent Solutions to keep integrations moving. My Account Manager confirmed that Zoho Recruit is a Certified Linkedin Linkedin Partner but does not have RSC as of yet., (we knew that :-) She encouraged me

• im facing issue on generate the Estimate price

  i couldn't understand what is the issue , i cant generate Estimate price where is the issue

• cannot be able to add user

  Dear team I tried to add a new user for sales team, but after entering the OTP its showing error message cannot add now

• Changing an existing item to different accounts & inventory-tracked

  Hi everyone, I have an item in Zoho Books that was originally set up as a non-inventory item. Over time, I associated it with different sales and purchase accounts, and I now have many invoices, bills, and reports that use this item. My business process

• How do I edit the Calendar Invite notifications for Interviews in Recruit?

  I'm setting up the Zoho Recruit Interview Calendar system but there's some notifications I don't have any control over. I've turned off all Workflows and Automations related to the Calendar Scheduling and it seems that it's the notification that is sent

• Bookings duration - days

  Hi team, Is there any way to setup services/bookings that span multiple days? I am using Zoho Bookings for meeting room bookings. Clients may wish to book a room for more than one day, for up to a month.  If not, is there a plan to allow services to be setup with durations of Days as well as hours and minutes? Many thanks, Anna.

• big 5 accounts

  how do you find what accounts are listed as Big 5 ?

• Zoho recruit's blueprint configuration is not functioning as mapped

  Current Status: Zoho Blueprint is not functioning as configured. Issue: We are moving a Candidate status in Zoho Recruit "for active file" but we encountered: "Status cannot be changed for records involved in Blueprint." This happens to various client

• Actual vs Minimum

  Hi all, I am sure I am not the only one having this need. We are implementing billing on a 30-minute increment, with a minimum of 30 minutes per ticket. My question is, is there a way to create a formula or function to track both the minimum bill vs the

• Delay in rendering Zoho Recruit - Careers in the ZappyWorks

  I click on the Careers link (https://zappyworks.zohorecruit.com/jobs/Careers) on the ZappyWorks website expecting to see the job openings. The site redirects me to Zoho Recruit, but after the redirect, the page just stays blank for several seconds. I'm

• How to add interviews through API

  I'm trying to add an interview without much luck. The documentation gives examples of adding just about everything except an interview. However, the issue might be the way I'm formatting it, because the documentation is unclear to me. It seems as if the xml should be passed in the url, which seems unusual. I've tried the data as both plain and character escaped, but nothing seems to work, nor do I even get an error response. https://recruit.zoho.com/recruit/private/xml/Interviews/addRecords?authtoken=***&scope=recruitapi&version=2&xmlData=<Interviews> <row

• Offer already made- but I withdrew it

  I made an offer letter, but made a mistake on it. I withdrew the offer but now I can't recreate the correct offer. Zoho keeps saying that "A same offer has already been made". I look in the "offers" and there are NO offers (this is the first time I've

• Control the precision of answer bot responses

  Hello everyone, Admins can control the precision with which the Answer bot analyzes and generates a response by adjusting the threshold levels. Based on predefined threshold values, Zia analyzes how closely the query matches with the available KB articles.

• Rebrand your CRM with the all-new custom domain mapping setup

  UPDATES TO THIS FEATURE! 19th Jan, 2024 — Custom domain mapping has been made available for portal users in Zoho One and CRM Plus. 23rd June, 2023 — Custom domain mapping has been made available for all users, in all DCs. Hello everyone! We are elated

• Add Israel & Jewish Holidays to Zoho People Holidays Gallery

  Greetings, We hope you are doing well. We are writing to request an enhancement to the Holidays Gallery in Zoho People. Currently, there are several holidays available, but none for Israel and none for Jewish holidays (which are not necessarily the same

• Sender Email ID is duplicate

  My sender id "automate@erplaunchpad.com" is coming as duplicate but I have not used it anywhere else please help

• CRM x WorkDrive: File storage for new CRM signups is now powered by WorkDrive

  Availability Editions: All DCs: All Release plan: Released for new signups in all DCs. It will be enabled for existing users in a phased manner in the upcoming months. Help documentation: Documents in Zoho CRM Manage folders in Documents tab Manage files

• Building Toppings #6 - Install and uninstall actions

  Hello Biginners! In our previous forum post, we explored creating connections - specifically, custom service connections in the Bigin Developer Console. In this post, we'll focus on another feature that can be used in every topping: install actions. We'll

• New UI in Zoho One CRM

  Hello, Just switched to the new UI for Zoho One CRM, do not like it, especially the search functions. What are the steps to backstep to the previous UI? UPDATE: I found it.

• App like Miro

  Hi all, is there a way to have a interactive whiteboard like in Miro? We want to visualize our processes and workflows in an easy way.

• Important updates to your connectors

  Hello everyone, Greeting from Zoho Creator! We're excited to announce that we'll be rolling out significant backend updates to Zoho Creator's built-in connectors to enhance security by following the latest frameworks. The existing version of some of the

• How Do Mutliple Sales People Prospect in the "LEADS" module without calling the same leads?

  We have 4 sales reps and the Leads module does not have real time intuitive knowlodge to make the sales rteps dont call the same people at the same time. How can we crate a fluent prospecting sytem where the salres reps can go out bound without calling

• Keeping track of project expenses

  I have talked to a few support techs and it is very hard for me to believe that Zoho's project accounting software can't keep accounts for my projects. I must not understand what they're saying. We get a contract to build something. So the project revenue

• Mailbox delegation - A secure way to enable collaboration

  Admins often encounter scenarios where a user needs another team member to access and manage their mailbox during extended leave, role transitions, or while handling high email volumes. In such situations, ensuring business continuity without sharing

• Canvas View bug

  I would like to report a bug. When clone a canvas view from an existing canvas view, if the original canvas view have canvas button with client script. Then the new create canvas view will have canvas button, it is make sense. But when I try to delete

• Export blueprint as a high-resolution PDF or image file

  This would be a good feature for organizations that want to share the blueprint process with their employees but don't want them to have access to the blueprint in the system settings. At the moment all that users can do is screenshot the blueprint or

• Zoho Recruit Community Meetup - London 🇬🇧 (Venue Finalised)

  Hello Recruiters! We’re excited to announce that the Zoho Recruit team is coming to the UK for an in-person Zoho User Group (ZUG) Meetup in London! This is your chance to connect with fellow Zoho users, learn from experts, and walk away with actionable

• Users may not pick the fields to be shown as columns in the Choose Account window when creating a new Deal record

  Hi there, by talking with other users I found out that I, as an Admin, am the only one who can pick fields to be shown as columns in the Choose Account window when creating a new Deal record. In fact, if other users click on the "Add Column" symbol on

• 【参加無料】東京 Zoho ユーザ交流会 NEXUS ー AI エージェント (Zia Agents)の活用事例 / CRMで実現するマーケティング業務効率化

  ユーザーの皆さま、こんにちは。コミュニティチームの藤澤です。 3月27日(金)に東京、新橋で「東京 Zoho ユーザー交流会 NEXUS」を開催します！ ーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーー ✒️申し込みはこちらから：https://www.zohomeetups.com/tokyo2026vol1#/?affl=communityforumpost2 ーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーーー ★参加のおすすめポイント ✅ AIエージェント（Zia）のリアルに使える実例を知る

• Error AS101 when adding new email alias

  Hi, I am trying to add apple@(mydomain).com The error AS101 is shown while I try to add the alias.

• ZOHO.CRM.UI.Record.open not working properly

  I have a Zoho CRM Widget and in it I have a block where it will open the blocks Meeting like below block.addEventListener("click", () => { ZOHO.CRM.UI.Record.open({ Entity: "Events", RecordID: meeting.id }).catch(err => { console.error("Open record failed:",

• Python - code studio

  Hi, I see the code studio is "coming soon". We have some files that will require some more complex transformation, is this feature far off? It appears to have been released in Zoho Analytics already

• 🚀 WorkDrive 6.0 (Phase 1): Empowering Teams with Content Intelligence, Automation, Accessibility, and Control

  Hello, everyone! WorkDrive continues to evolve from a robust file management solution into an intelligent, secure, and connected content collaboration platform for modern businesses. Our goal remains unchanged: to simplify teamwork, strengthen data security,

• Next Page