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

• Mail Id’s backup

  Dear Zoho Team, Kindly share the backup of my all mail id’s associated with Zoho account. Thanks, Saurabh Sharma +91 8851066915

• Recurring Events Not Appearing in "My Events" and therefore not syncing with Google Apps

  We use the Google Sync functionality for our events, and it appears to have been working fine except: I've created a set of recurring events that I noticed were missing from my Google Apps calendar. Upon further research, it appears this is occurring

• 360 SMS App - Zoho CRM SMS, MMS & WhatsApp Messaging Extension

  Sharing our extension for anyone looking for texting inside Zoho CRM: 360 SMS App supports SMS, MMS, WhatsApp, and two-way texting, connected directly to your Leads, Contacts, Deals, and custom modules. Built-in TCPA/GDPR opt-in management handles compliance

• Stock Based Sort-by option in Category Pages

  In a category page product with In-Stock should come in the top of the categories product list rather than out-of-stock products. No having this option is extremely disappointing, I made the initial request about 7 months ago but still not even an update

• Stock based sort-by option

  I have more than 300 products in a category with out of stock items count of 150. The out of stock items are coming on top of the category product page list, is there a way to show the in-stock items on top of the list & move the out -of stock items in

• Out of Stock items showing in Commerce

  I have over 6000 items and most are not in stock, but all items are showing up in Commerce whether they are inventory or not. What option or feature can you use to hide items in Commerce at zero or negative quantities? I currently am using Commerce for

• Creating Email template that attaches file uploaded in specific field.

  If there's a way to do this using Zoho CRM's built-in features, then this has eluded me! I'm looking to create a workflow that automatically sends an email upon execution, and that email includes an attachment uploaded in a specific field. Email templates

• What's New in Zoho Billing | July 2026

  July brings a new set of updates to Zoho Billing to make your billing operations more efficient. These include a redesigned checkout experience, expanded Hosted Payment Page capabilities, compliance improvements, enhanced reporting, and more. Enhancements

• Zoho CRM Community Digest - July 2026 | Part 1

  Hello everyone, July is here! The first two weeks brought six CRM updates ranging from privacy-ready webforms to a significantly more powerful Layout Rules engine, two community wins worth a look (a dashboard workaround for spotting leads with no activities,

• Zoho CRM - Email/Message icon for Deal List View

  Hi Team, My idea is to include a message icon at the start of the row of Deals when an unread message has been received. This would really help highlight the Deals where urgent action is required. Thanks for considering this request. Regards, Ashley

• Email notification for followers

  Is there a way to enable email notification for followers of a support ticket? ie: Ticket #123 is owned by Agent#1, Agent#2 adds themselves as a follower. Whenever ticket #123 receives an email from the customer, Agent#1 receives an email. Agent#2 would

• Introducing parent-child ticketing in Zoho Desk [Early access]

  Hello Zoho Desk users! We have introduced the parent-child ticketing system to help customer service teams ensure efficient resolution of issues involving multiple, related tickets. You can now combine repetitive and interconnected tickets into parent-child

• Desk Contact Name > split to First and Last name

  I am new to Zoho and while setting up the Desk and Help Center, I saw that new tickets created or submitted from the Help Center used the Contact Name field. This would create a new Contact but put the person's name in the Last Name field only. The First

• Vendor payment unexpectedly routed through Prepaid Expenses instead of Accounts Payable

  Hello, We are investigating an unexpected accounting behavior in Zoho Books. We created vendor bills and vendor payments for two suppliers using what appears to be the same workflow, but the journal entries are different. Vendor 1 – UZ Store (works correctly)

• Dashboard Metric Drill-Down Shows Stale Data

  Summary: When clicking between different metric components on a custom dashboard, the drill-down list shows data from the previously opened metric instead of the one just clicked. Steps to Reproduce: Create a custom dashboard with multiple pre-defined/templatized

• Managing Shopify Payout Balances in Zoho Books

  I am recording my Shopify orders as Invoices and once Shopify credits my bank account I reconcile the payout to the specific invoices and create a new transaction to account for the Shopify Merchant Fee. That is fairly straightforward to me. How should

• Charging for WhatsApp replies starting in October 2026

  Meta has announced that it will charge for reply messages on WhatsApp starting October 1, 2026, and the free 24-hour window will no longer exist. How will Zoho SalesIQ handle this billing? https://developers.facebook.com/documentation/business-messa

• Upcoming Change: Increased character limits for module and field labels

  To provide greater flexibility in customizing your CRM, we are increasing the maximum character limits for module labels and field labels in Zoho CRM. What's changing? Label Current Limit New Limit Module Label 25 characters 50 characters Subform Module

• Change of Blog Author

  Hi, I am creating the blog post on behalf of my colleague. When I publish the post, it is showing my name as author of the post which is not intended and needs to be changed to my colleague's name. How can I change the name of the author in the blogs?? Thanks, Ramanan

• Q3 USA ZUG Meetups - Build AI Agents with Zoho

  Hi everyone! What if you could build your own AI agent from scratch in just one session? That's exactly what we're going to do at the upcoming ZUG Meetups across the United States, where you'll get hands-on experience with Zia Agents and explore how AI

• SPAM (and some other) folders missing on three of my Zoho Mail accounts

  I have four email accounts with Zoho Mail. Three days ago, the Spam folder on three of these accounts vanished. It is gone on the Windows and Linux desktops as well as the web-based and Android versions, and I have tried it on multiple machines. The only

• Using data from multiple sheets

  I am looking for a way to automate the process of taking multiple Zoho sheets and collating the data into one combined sheet (such that no duplicates occur). Currently I can only think of importing all the sheets into Excel and then running a macro to perform the task. Is there a simpler way offered by Zoho?

• Error 1011 saving website personalisation — blocking all changes (corrupted "home_page.content" field)

  When trying to save changes under Settings → Brands → MY COMPANY → Website → Personalisation → Messenger, I receive the following error: "Either the request parameters are invalid or absent" upon checking on the developer console of the browser I get

• Tip #7 - Siri shortcuts in Zoho CRM

  Hello Everyone, Here is a tip about the 'Siri Shortcuts' feature and how it works in the iOS version of the Zoho CRM mobile app. What are Siri shortcuts? Siri Shortcuts are quick actions across your apps on iOS. They can perform an action automatically

• Delete Field that is used in a Zoho Flow connection

  I'm trying to delete a Field used in a Webhook created by Zoho Flow with CRM Connection and i get the following alert: When going to the alert i get to the following issue, can't edit it since its been deployed by a pluggin But yes i have here the prompted

• Automatic Department and Employee Sync Between Zoho One and Zoho People

  Dear Zoho Support, I'm writing to propose a valuable feature request that would streamline data management and improve user experience within the Zoho ecosystem: automatic synchronization between departments and employees in Zoho One and Zoho People.

• Nothing triggers a Journey

  I have been on the phone with Zoho support and they claim their development team needs to investigate more. However, I've found this is a pretty standard answer after a call takes any amount of time. After that, it's days and even weeks before it actually

• Manually Backorder Sales Order and/or Change Sales Order Status

  Is there an option to manually 'backorder' a sales order, or otherwise change it's status?  In some cases, we receive orders for products that are out of stock, but we already have issued POs to our suppliers for replenishment.   Ex- we created a PO on

• Backorder process review - Automating Removal of Sales Order from "On Hold" When PO is Received

  Hello Zoho Inventory Team, Currently, sales orders in On Hold status are released only when the bill for the purchase order is created. In our workflow, it would be much more efficient if the sales order could automatically move out of On Hold as soon

• Kaizen #254 - Building a Temporal Lead Score Decay System in Zoho CRM

  Hello, CRM Wizards! Welcome to a fresh week of Kaizen. In this post, we will build a temporal lead score decay system that works alongside your existing scoring rules by introducing percentage-based score decay driven solely by customer inactivity. By

• Metadata API Access to Functions

  I think it would be incredibly helpful to have api access to every function's code. Our team primarily uses deluge functions to update fields across modules according to business logic. I would like to create a visual dependancy model for our CRM, but

• API actions/approvals endpoint returns UNAPPROVABLE despite user having full permissions and being the assigned approver

  Hi Team, We are trying to programmatically approve a record via the CRM API but consistently receive an UNAPPROVABLE error, even though the same user can approve the record without issue from the UI. Endpoint called: POST https://www.zohoapis.com/crm/v6/{module}/{record_id}/actions/approvals

• Get a realistic picture of your revenue with Forecast Adjustments in Zoho CRM

  #crm25q1 Dear Customers, We hope you're doing well! Today, we're here with an important enhancement for business decision makers: forecast adjustments. Let's get straight to it! With technology on the rise and CX at its core, businesses are constantly

• I am not able to check in and checkout in zoho people even location access allowed

  This issue i am facing in mackbook air m1, I allowed location in chrome browser and i also tried in safari but getting similar issue. Please have a look ASAP.

• WhatsApp Vendors Module

  Hello, so WhatsApp works with the below, mainly with the customer side modules. Can we get functionality on the vendor side modules, i.e., PO, Bills, Vendor Credits, Payments Made, Purchase Received? WhatsApp is often the preferred method of communication

• Upload ticket attachments via Drag-&-Drop

  Hello, if you want to upload a file to the ticket attachment you need to click the button and use the file browser to select and upload the desired file. In many cases, it would be much more efficient if you could simply drag the file to the browser window...

• Elevate your Radar experience: Best practices part 3

  In the Spotlight: Zoho Desk's Radar app Customer support requires human intelligence combined with emotional intelligence. How about these coupled with contextual intelligence? These elevate the customer support experience. When providing support through

• Migrating my email from GMAIL to ZOHO MAIL..........

  I am a long time GMAIL user and I really only understand how they operate, but after reviewing your tutorials and forums online, it is quite unbelievable how much more and how much more streamlined ZOHO mail is, not to mention ZOHO's wonderful, more advanced capabilities. I do have several questions about transitioning over to ZOHO.  Primarily, where is the best place to start, what do I do first? And how hard is it actually to move all my business and personal accounts over here?  When I sign up

• Unable to send message;Reason:553 Relaying disallowed. Invalid Domain

  Hi, Now when I try to reply to an email, I see the Unable to send message;Reason:553 Relaying disallowed. Invalid Domain voicemessagedownloader.com error. I tested sending an email when I set it up in the past and it worked. I have checked the Zoho Organization

• Set Custom Icon for Custom Modules in new Zoho CRM UI

• Next Page