Revenue Recognition: Subscription

For some companies, it is common to sell services or licenses invoiced as a monthly or annual subscription.

In this case, revenue is not based on the project invoice, but on the subscription amount. Revenue can be handled in different ways, but most often, the process is as follows:

• The subscription fee is billed on an annual basis in advance.
• The solution distributes the amount in advance into the periods of that year.
• Revenue is then split equally and recognized month by month according to the length of the subscription period (note that Subscription is an add-on to the solution).