Revenue & Expense Rules

Recognition Recognition Rules

RevLock support several different ways in which revenue can be recognized. It uses standalone selling price library to map each product item in the contract to the respective revenue recognition rule.

Ratable

Ratable method of revenue recognition distributes the revenue equally across the performance period of product is sold. This is true even if the booking and billing for the entire contract is received upfront. Ratable method is commonly used to recognize revenue for SaaS based product offering. Another common use case is with post contract customer support where period is generally a year from the initial contract.

Point in Time

When using Point in Time revenue method, full booking amount of the product sold is recognized at the time of delivery. Common use cases are product training, hardware, perpetual and term software license.

Proportional Performance

When using Proportional Performance revenue method, revenue is recognized each period based on services that are delivered or the proportion of the work that is completed. For e.g. A company selling 1000 hours of professional service engagement to setup a medical laboratory in a hospital. Revenue here will be recognized each period based on number of hours for which the service was provided.

Expense Rules

Point in Time

Full booking amount of the expense is recognised at the time of delivery.

Ratable

The expense amount is capitalised and amortised over the period of time, or over the period of the contract for any subsequent renewals.

Updated on: 27/06/2022