> ## Documentation Index
> Fetch the complete documentation index at: https://docs.paynext.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Revenue Recognition
> Recognize subscription revenue over the service period, track deferred revenue, and export journal entries from the Dashboard.
Revenue recognition shows the revenue you have earned in a month, not only the cash you collected. Under ASC 606 and IFRS 15, a subscription payment is earned gradually over the period it pays for. The report spreads every settled payment over its service period, keeps the unearned part as deferred revenue, and gives you the journal entries to post at month end.
Open it in **Dashboard → Reporting → Revenue recognition**. All figures are in USD, by calendar month in UTC.
## Why use it
* **Close the month on an accrual basis** — see revenue earned in the month next to cash collected, with the difference explained.
* **Carry a deferred revenue balance** — know how much collected cash is still owed as service, and when it will be earned.
* **Post summary journal entries** — export one line per account pair per month instead of translating the summary by hand.
* **Explain revenue by plan** — see which plans and billing periods drive booked, recognized, and deferred revenue.
## How revenue is recognized
Every figure in the report follows these rules.
1. **Only settled payments count.** A payment enters the report when the processor settles it. Declined, failed, cancelled, and still-pending payments are excluded.
2. **A payment is booked in the month it was authorized.** Authorization is when the customer's charge is approved and access begins. Until the funds settle, the amount is a receivable from the processor.
3. **The service period starts on the authorization day** and runs for the billing period of the subscription on the payment. A trial payment covers its trial period. A payment without a subscription period is a one-time purchase and is recognized in full on the authorization day.
4. **Revenue is spread evenly per day** over the service period and allocated to calendar months. Amounts are rounded to whole cents so the months of one payment always sum to the payment.
5. **Tax is not revenue.** Collected tax is shown separately as a liability. Tax returned to customers reduces that liability.
6. **A refund reverses revenue from the refund date.** The share already recognized becomes contra revenue in the refund month. The share not yet recognized is removed from deferred revenue in the same month.
7. **Cash figures use the settlement date.** The cash view shows what the processor settled in the month, including tax, less refunds settled in the month.
The report books no estimate for future refunds. It shows a suggested refund reserve as a memo so your finance team can decide whether to book one.
## Worked example
A customer pays \$29.99 for a 28-day plan on 20 August. The processor settles the payment on 22 August.
| | |
| :-------------------------------- | :--------------------------------- |
| **Service period** | 20 August to 16 September, 28 days |
| **Revenue per day** | \$29.99 ÷ 28 = \$1.071 |
| **August revenue** | 12 days = \$12.85 |
| **September revenue** | 16 days = \$17.14 |
| **Deferred revenue at 31 August** | \$17.14 |
On the cash basis, August shows \$29.99 collected and September shows nothing. On the accrual basis, August earns \$12.85 and September earns \$17.14.
If the customer is refunded on 1 September, recognition stops on that day. August keeps its \$12.85. September shows refunds of \$12.85, reversing the revenue already earned, and credits issued of \$17.14, clearing the deferred balance. Together they reverse the full \$29.99.
## Period summary
The Period summary shows one month as a statement. Pick the month and the basis in the card title. The default is the last closed month on the accrual basis.
### Accrual basis rows
| Row | How it is calculated | What it tells you |
| :----------------------------------------- | :--------------------------------------------------------------------------------------------- | :------------------------------------------------------- |
| **Revenue from billings this month** | Revenue earned this month from payments booked this month | New business earned right away |
| **Recognized revenue previously deferred** | Revenue earned this month from payments booked in earlier months | Service delivered on cash collected before |
| **Refunds** | Revenue already recognized on payments refunded this month, as a negative | Earned revenue given back |
| **Net revenue** | The three rows above added together | Your accrual revenue for the month |
| **Tax collected** | Tax settled with this month's cash | Liability to tax authorities, not revenue |
| **Tax refunded** | Tax returned to customers on refunds this month | Reduction of the tax liability |
| **Starting balance** | Deferred revenue at the start of the month | Service still owed on the 1st of the month |
| **Deferred change from new billings** | Revenue of payments booked this month, before any of it is earned | Cash-backed service obligations added |
| **Less recognized revenue** | All revenue earned this month, from any booking month | Obligations fulfilled |
| **Less credits issued** | Deferred revenue removed by refunds this month | Obligations cancelled by refunds |
| **Ending balance** | Starting balance + new billings − recognized revenue − credits issued | Service still owed at month end |
| **Processor receivable, ending balance** | Payments authorized in this month, or an earlier month, that were not yet settled at month end | Revenue booked this month whose cash had not yet arrived |
Only payments that have since settled are included, because the report counts settled payments only. An authorization that is still unsettled today appears in the pending settlement memo instead.
### Cash basis rows
| Row | How it is calculated | What it tells you |
| :----------------- | :----------------------------------------- | :---------------------------------------- |
| **Cash collected** | Payments settled this month, including tax | Money that reached your processor balance |
| **Refunds** | Refunds settled this month, including tax | Money returned to customers |
| **Net cash** | Cash collected − refunds | Your cash-basis revenue for the month |
| **Tax collected** | Tax settled this month | Liability to tax authorities |
| **Tax refunded** | Tax returned on refunds this month | Reduction of the tax liability |
| **Ending balance** | Deferred revenue at month end | Same balance as the accrual view |
### Pending settlement memo
Payments that are authorized but not yet settled appear in a memo section at the bottom of the summary. They are never part of the rows above.
| Row | How it is calculated | What it tells you |
| :------------------------------- | :----------------------------------------------------------------------------- | :------------------------------------ |
| **Pending revenue (in flight)** | Revenue that unsettled payments would earn this month if they settle | How much the month can still grow |
| **Pending deferred (in flight)** | Revenue of unsettled payments authorized this month that falls after month end | Deferred revenue waiting to be booked |
| **Pending cash (in flight)** | Gross amount of unsettled payments authorized this month | Cash expected from the processor |
Use these rows to judge when a month is stable. When pending revenue for a closed month is close to zero, no material settlements are outstanding.
### Suggested refund reserve
The last memo row estimates a refund reserve for the month. It multiplies the revenue booked this month by your average refund rate. The rate uses months booked at least 60 days ago, so their refunds have had time to arrive, and attributes each refund to the month its payment was booked. The row shows the rate used. Nothing is booked; whether to record a reserve is your accounting policy.
## Cash vs accrual
The chart shows net cash as bars and net recognized revenue as a line. The table below it lists every month in the selected range.
| Column | How it is calculated | What it tells you |
| :-------------------------------------------------- | :-------------------------------------------------- | :----------------------------------------------- |
| **Cash collected** | Payments settled in the month, including tax | Money received |
| **Refunds** | Refunds settled in the month, as a negative | Money returned |
| **Net cash** | Cash collected − refunds | Cash-basis result |
| **Recognized revenue** | Revenue earned in the month from all bookings | Accrual revenue before refunds |
| **Refunds** (accrual) | Recognized revenue reversed by refunds in the month | Contra revenue |
| **Net recognized revenue** | Recognized revenue − refunds | Accrual-basis result |
| **Pending revenue (in flight)** | Memo, as in the Period summary | Not booked |
| **Accrual minus cash** | Net recognized revenue − net cash | Timing difference between earning and collecting |
| **MoM net cash** and **MoM net recognized revenue** | Change from the previous month in percent | Growth on each basis |
A positive "Accrual minus cash" means you earned more than you collected, usually because earlier prepayments are being recognized. A negative value means you collected cash for service still to be delivered.
## Revenue waterfall
The waterfall shows, for revenue booked in each month, how much was earned in every later month.
| Column | How it is calculated | What it tells you |
| :---------------- | :------------------------------------------------------------- | :----------------------- |
| **Booked month** | Month of authorization | The cohort of payments |
| **Total** | Revenue booked in that month, net of tax | The cohort's value |
| **Month columns** | Revenue from the cohort earned in each month | The recognition schedule |
| **Recognized** | Sum of the month columns inside the selected range | Earned so far |
| **Remaining** | Revenue from the cohort still deferred at the end of the range | Still to be earned |
For a cohort without refunds, Recognized + Remaining = Total. Refunds reduce the month columns of the refunded payments, so for a cohort with refunds the difference to Total equals its credits issued.
## Deferred revenue roll-forward
The roll-forward shows the movement of the deferred revenue balance month by month.
| Column | How it is calculated | What it tells you |
| :------------------------------------ | :--------------------------------------------------------------------------------------------- | :-------------------------------------------- |
| **Starting balance** | Previous month's ending balance | Opening obligation |
| **Deferred change from new billings** | Revenue of payments booked in the month | Added obligation |
| **Less recognized revenue** | Revenue earned in the month | Fulfilled obligation |
| **Less credits issued** | Deferred revenue removed by refunds | Cancelled obligation |
| **Ending balance** | Starting + new billings − recognized − credits | Closing obligation |
| **Receivable ending balance** | Payments authorized in this month, or an earlier month, that were not yet settled at month end | Booked revenue whose cash had not yet arrived |
| **Pending deferred (in flight)** | Memo, as in the Period summary | Not booked |
**Future unwind of ending balance** lists, month by month, when the current ending balance will be earned. It stops when the balance reaches zero.
## Revenue by plan
Pick the month in the card title and choose to group by **plan** or by **period**. Grouping by period combines all plans with the same billing period, such as every 28-day plan.
| Column | How it is calculated | What it tells you |
| :------------------------- | :---------------------------------------------------------- | :------------------------------- |
| **Plan** or **Period** | The subscription plan on the payment, or its billing period | Which product earned the revenue |
| **Collected** | Revenue booked in the month for this plan | New business by plan |
| **Recognized revenue** | Revenue earned in the month for this plan | Service delivered by plan |
| **Refunds** | Contra revenue in the month for this plan | Refund exposure by plan |
| **Net recognized revenue** | Recognized revenue − refunds | Accrual revenue by plan |
| **Ending balance** | Deferred revenue at month end for this plan | Obligation by plan |
Payments without a subscription plan are grouped as **One-time payments**. The total row equals the Period summary of the same month.
## Journal entries export
In the Period summary, open **Export CSV** and choose **Journal entries (all months)**. The file contains one line per account pair per month for every month in the selected range. Zero amounts are skipped. Account names are placeholders; map them to your chart of accounts when importing.
| Debit | Credit | Amount |
| :-------------------- | :-------------------- | :--------------------------------------- |
| `ProcessorReceivable` | `DeferredRevenue` | Revenue booked in the month, net of tax |
| `ProcessorReceivable` | `TaxLiability` | Tax on payments booked in the month |
| `Cash` | `ProcessorReceivable` | Cash settled in the month, including tax |
| `DeferredRevenue` | `Revenue` | Revenue recognized in the month |
| `Refunds` | `Cash` | Recognized revenue reversed by refunds |
| `DeferredRevenue` | `Cash` | Deferred revenue removed by refunds |
| `TaxLiability` | `Cash` | Tax returned on refunds |
Lines for pending settlement carry `memo=true`. They describe authorizations still in flight and are not booked; exclude them when posting.
Columns are `accounting_period` (`YYYY-MM`), `debit`, `credit`, `amount` (USD with two decimals), `memo` (`true` or `false`), and `description`.
```csv theme={"system"}
accounting_period,debit,credit,amount,memo,description
2026-08,ProcessorReceivable,DeferredRevenue,29.99,false,"Billings booked at authorization, deferred (net of tax)"
2026-08,Cash,ProcessorReceivable,29.99,false,Cash settled by the processor (gross)
2026-08,DeferredRevenue,Revenue,12.85,false,Revenue recognized
2026-09,DeferredRevenue,Revenue,17.14,false,Revenue recognized
```
## Close a month
Choose a date range that ends after the month you are closing. The report defaults to the last 6 months.
In the Period summary, pick the month and confirm the pending settlement rows are close to zero. If not, wait for the remaining authorizations to settle or book the pending amounts as an accrual.
Confirm the Period summary ending balance equals the roll-forward ending balance for the month, and that the Revenue by plan total equals the Period summary.
Open **Export CSV → Journal entries (all months)**, keep the lines for the month you are closing, and drop the lines with `memo=true`.
Record disputes and chargebacks, processor fees, foreign exchange differences, and any refund reserve from your own sources before posting.
The report excludes disputes, chargebacks, processor fees, and foreign exchange differences between authorization and settlement. Add them from your processor statements before posting.
## Filters and date range
* The date range selects whole calendar months. The current month is included as month-to-date.
* The payment filters on the Dashboard apply to every card.
* Figures for the current and previous month can change until late-settling authorizations resolve. A payment is added when it settles and is booked back into its authorization month.