Revenue Management: #2 How to compute revenue?

Revenue Management: #2 How to compute revenue?

 

In our previous post, we discussed the revenue recognition standards under IFRS 15 and ASC 606 and the five-step model. Now, let's examine three distinct business scenarios to see how the standards and model work in practice. This will help you understand the timeline and values, as well as the challenges that lie behind them. 

​
Scenario 1: One-time Product/Service Delivery

Imagine a custom furniture maker who takes an order in January and is paid $5000 up front for a handcrafted wall hanging that will be delivered in March. Applying the five-step logic from the previous post, the performance obligation here is fulfilled only when the wall hanging is delivered. That means the $5000 sits on the balance sheet as unearned/deferred revenue until March (promised delivery), and computation for a one-time product or service is simple. Record $5000 as recognized revenue in March in one short.

Service

Handcrafted Wall Hanging

Month

Deferred Revenue

Recognized Revenue

January

$5000

$0

February

$5000

$0

March

$0

$5000

 

Scenario 2: Subscription-based Services

Let's picture an online training application that charges $120 for a 12-month training, paid upfront in January. The seller's obligation is to provide sessions once a month. The computation here is straightforward. $120 / 12 = $10 per month. Recognition happens each month as the service is delivered throughout the subscribed period.

Service

Online Training Application

Months

Deferred Revenue

Recognized Revenue

January

$110

$10

February

$100

$20

March

$90

$30

April

$80

$40

May

$70

$50

June

$60

$60

July

$50

$70

August

$40

$80

September

$30

$90

October

$20

$100

November

$10

$110

December

$0

$120

 

Scenario 3: Hybrid Model

Consider a marketing agency that sells a $5000 package made up of two components: a $2000 website redesign, which will be completed in two months, and $3000 of social media management spread across six months. Under the five-step approach, there are two obligations, and while recognizing the revenue, recognize each portion as its obligation is satisfied.

​

While computing, $2000 is recognized fully in the second month as and when the website goes live, and $3000 will be divided for the six months and recognized at $500 per month. 

Service

Website Redesign

Social Media Management

Months

Deferred Revenue

Recognized Revenue

Deferred Revenue

Recognized Revenue

January

$2000

$0

$2500

$500

February

$0

$2000

$2000

$1000

March

 

 

$1500

$1500

April

 

 

$1000

$2000

May

 

 

$500

$2500

June

 

 

$0

$3000

 

The Real Challenge in Revenue Recognition

While these examples are easy to follow individually, businesses rarely operate with just one recognition rule or pattern. A software company might bill monthly for some services and yearly for others, and sell one-off onboarding sessions. A manufacturer might deliver large contracts in milestones while earning recurring revenue for maintenance contracts.
​
So, a single business may have a recognition period that is monthly, yearly, or sometimes quarterly. One can recognise revenue at the start of a specific service, and the other may decide to do it at the end of the period.   
AlertDifferent recognition periods, billing cycles, start and end dates, upgrades and downgrades, and other contract amendments can easily make revenue recognition a nightmare for business stakeholders.
That's why businesses use revenue management tools like Zoho Billing to automate the calculation and gain accurate, detailed, and meaningful insights. These tools encapsulate the five-step model framework into repeatable calculations, so every contract is treated consistently and in compliance with global standards.

The next post'll show how a revenue management tool helps you configure recognition settings and turn these computations into audit-ready reports. 





      • 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

        • link to any Belgian bookkeeping software?

          Hello, Does anyone on this Forum can help me with the question whether the ZOHO CRM (Invoices) or ZOHO Book can be linked to software that is used for Belgian Bookkeeping/accountancy? By linking, I mean either with the help of a middleware program or either by the ability to export the custom made reports as CSV-files... If someone has an experience with online CRM-Accountancy in Belgium, with ZOHO (or other), it would be great to read it... Thank you

        • Client Script | Update - Introducing Subform Events and Actions

          Are you making the most of your subforms in Zoho CRM? Do you wish you could automate subform interactions and enhance user experience effortlessly? What if you had Client APIs and events specifically designed for subforms? We are thrilled to introduce

        • Kaizen #152 - Client Script Support for the new Canvas Record Forms

          Hello everyone! Have you ever wanted to trigger actions on click of a canvas button, icon, or text mandatory forms in Create/Edit and Clone Pages? Have you ever wanted to control how elements behave on the new Canvas Record Forms? This can be achieved

        • how to use validation rules in subform

          Is it possible to use validation rules for subforms? I tried the following code: entityMap = crmAPIRequest.toMap().get("record"); sum = 0; direct_billing = entityMap.get("direct_billing_details"); response = Map(); for each i in direct_billing { if(i.get("type")

        • Global Sets for Multi-Select pick lists

          When is this feature coming to Zoho CRM? It would be very useful now we have got used to having it for the normal pick lists.

        • stock

          bom/bse : stock details or price =STOCK(C14;"price") not showing issue is #N/A! kindly resolve this problem

        • Zoho sheet desktop version

          Hi Zoho team Where can I access desktop version of zoho sheets? It is important as web version is slow and requires one to be online all the time to do even basic work. If it is available, please guide me to the same.

        • ZOHO SHEETS

          Where can I access desktop version of zoho sheets? It is important to do basic work If it is available, please guide me to the same

        • Option to Empty Entire Mailbox or Folder in Zoho Mail

          Hello Zoho Mail Team, How are you? We would like to request an enhancement to Zoho Mail that would allow administrators and users to quickly clear out entire folders or mailboxes, including shared mailboxes. Current Limitation: At present, Zoho Mail only

        • Zoho Books - France

          L’équipe de Zoho France reçoit régulièrement des questions sur la conformité de ses applications de finances (Zoho Books/ Zoho Invoice) pour le marché français. Voici quelques points pour clarifier la question : Zoho Books est un logiciel de comptabilité

        • Using Zoho Flow to create sales orders from won deal in Zoho CRM

          Hi there, We are using Zoho Flow to create sales orders automatically when a deal is won in Zoho CRM. However, the sales order requires "Product Details" to be passed in "jsonobject", and is resulting in this error: Zoho CRM says "Invalid input for invalid

        • Is Zoho Sheet available for Linux ?

          Is Zoho Sheet available for Linux ?

        • how to disable staff selection Zoho Booking integrated to SalesIQ?

          currently there is only one Consultant in my Zoho Bookings like this I integrate Zoho Bookings into Zoho SalesIQ to create a chatbot. Unfortunately, even though I only have one consultant for a consultation, the user have to pick the consultant. It will

        • Zoho Bookings No Sync with Outlook

          Zoho Bookings appointments are showing on my Outlook Calendar but Outlook events are not showing on Zoho Bookings. How do I fix this?

        • End Date in Zoho Bookings

          When I give my appointments a 30 minutes time I would expect the software not to even show the End Time.  But it actually makes the user pick an End Time.  Did I just miss a setting?  

        • Custom confirmation message

          How can I change the message that users see after they submit the booking form? I have to confirm some details before their appointment is officially "confirmed", so I want to change it where it doesn't say their appointment is "confirmed" but rather

        • Issue showing too many consultations in my workspace link.

          Hi Team, I’ve set up two Workspaces to track meetings from different sources. So far, this has been working well, and the two Workspaces are differentiated without any issues. However, when I navigate to Consultations and share the link to my personal

        • All new Address Field in Zoho CRM: maintain structured and accurate address inputs

          The address field will be available exclusively for IN DC users. We'll keep you updated on the DC-specific rollout soon. It's currently available for all new sign-ups and for existing Zoho CRM orgs which are in the Professional edition. Managing addresses

        • Recurring Supervisor Rule Reminders for Open/In-Progress Tickets

          Hello Zoho Support Team, I would like to suggest a potential improvement regarding reminders for tickets and activities in Zoho Desk. Currently, it is possible to set reminders only once. In the Supervisor Rules section, it is possible to configure reminders

        • Improved RingCentral Integration

          We’d like to request an enhancement to the current RingCentral integration with Zoho. RingCentral now automatically generates call transcripts and AI-based call summaries (AI Notes) for each call, which are extremely helpful for support and sales teams.

        • Deluge sendmail in Zoho Desk schedule can't send email from a verified email address

          I am trying to add a scheduled action with ZDesk using a Deluge function that sends a weekly email to specific ticket client contacts I've already verified the email address for use in ZDesk, but sendmail won't allow it in its "from:" clause. I've attached

        • Zoho Learn & Zoho Connect

          Hi, Is there a way to sync the knowledge base we have in Zoho Learn with the manuals section is Zoho Connect? Thanks,

        • Addin Support in Zoho Sheet

          Is there any addin support available in zoho sheet as like google marketplace to enhance productivity by connecting with other apps, providing AI data analysis, streamlining business processes, and more?

        • Allow syncing Activities from other applications

          Marketing Automation could be a much more powerful platform if you were able to sync activities into the platform (e.g. purchase, donation, etc) outside of a user doing something on your website. I'd love it if you could sync Custom CRM Modules as activities,

        • Changing Corporate Structure - How Best to Adapt Current and Future Zoho Instances

          My current company is Company A LLC with a dba ("doing business as" - essentially an alias) Product Name B. Basically, Company A is the legal entity and Product Name B is what customers see, but it's all one business right now. We currently have a Zoho

        • how to add subform over sigma in the CRM

          my new module don't have any subform available any way to add this from sigma or from the crm

        • {"errors":[{"id":"500","title":"Servlet execution threw an exception"}]}

          Here's the call to move a file to trash. The resource_id is accurate and the file is present. header = Map(); header.put("Accept","application/vnd.api+json"); data = Map(); data_param1 = Map(); att_param1 = Map(); att_param1.put("status",51); data_param1.put("attributes",att_param1);

        • How to Install Zoho Workdrive Desktop Sync for Ubuntu?

          Hi. I am newbie to Linux / Ubuntu. I downloaded a tar.gz file from Workdrive for installing the Workdrive Desktop Sync tool. Can someone give me step by step guide on how to install this on Ubuntu? I am using Ubuntu 19.04. Regards Senthil

        • Integración Books para cumplir la ley Crea y Crece y Ley Antifraude (VeriFactu)

          Hola: En principio, en julio de 2025, entra en vigor la ley Crea y Crece y Ley Antifraude (VeriFactu). ¿Sabéis si Zoho va a cumplir con la ley para cumplir con la facturación electrónica conectada a Hacienda? Gracias

        • How to upload own video?

          How can you upload your own video on your zoho website? I do not want to use another host, but i want to insert my own files. how can i do this?

        • Support new line in CRM Multiline text field display in Zoho Deluge

          Hi brainstrust, We have a Zoho CRM field which is a Muti Line (Small) field. It has data in it that has a carriage return after each line: When I pull that data in via Deluge, it displays as: I'm hoping a way I can change it from: Freehand : ENABLED Chenille

        • A couple of minor enhancements to Workflows

          Last updated on September 17, 2024: These enhancements were initially available for early access, and we've now enabled them for all users. We are elated to announce a couple of enhancements to custom functions in our Workflows! Say hello to: "Source"

        • Announcing new features in Trident for Windows (v.1.32.5.0)

          Hello Community! Trident for Windows just got better! This update includes new features designed to improve and simplify email and calendar management—and it includes a feature you’ve been waiting for. Let’s dive into what’s new! Save emails in EML or

        • How to render either thumbnail_url or preview_url or preview_data_url

          I get 401 Unauthorised when using these urls in the <img> tag src attribute. Guide me on how to use them!

        • Zoho CRM Calendar | Custom Buttons

          I'm working with my sales team to make our scheduling process easier for our team. We primary rely on Zoho CRM calendar to organize our events for our sales team. I was wondering if there is a way to add custom button in the Calendar view on events/meeting

        • Default Sorting on Related Lists

          Is it possible to set the default sorting options on the related lists. For example on the Contact Details view I have related lists for activities, emails, products cases, notes etc... currently: Activities 'created date' newest first Emails - 'created

        • Directly Edit, Filter, and Sort Subforms on the Details Page

          Hello everyone, As you know, subforms allow you to associate multiple line items with a single record, greatly enhancing your data organization. For example, a sales order subform neatly lists all products, their quantities, amounts, and other relevant

        • Create custom rollup summary fields in Zoho CRM

          Hello everyone, In Zoho CRM, rollup summary fields have been essential tools for summarizing data across related records and enabling users to gain quick insights without having to jump across modules. Previously, only predefined summary functions were

        • 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

        • Create Lead Button in Zoho CRM Dashboard

          Right now to create Leads in the CRM our team is going into the Lead module, selecting the "Create Lead" button, then building out the lead. Is there anyway to add the "Create Lead" button or some sort of short cut to the Zoho CRM Dashboard to cut out

        • Next Page