Stripe, a global technology company that builds economic infrastructure for the internet, has today launched Revenue Recognition to millions of users in 40 countries around the world, including Australia.
Recognising revenue is the process of mapping the money businesses make to the correct date (or dates) on a balance sheet—for example, when a customer receives a product or uses a service, rather than when the customer made a payment. Too often, it is a manual, inefficient, and error-prone process for finance teams.
The complexities of accurately recognising revenue
For a company’s leaders and investors, revenue recognition—a key part of GAAP (Generally Accepted Accounting Principles) standards—provides an accurate representation of profits and the ability to comprehend a company’s financials in a standardised fashion.
Maintaining accurate books under this standard can be especially complex for SaaS, subscription, and e-commerce companies, which are typically paid up front for goods and services that will be delivered in the future or over an extended period of time.
For example, an e-commerce provider would recognise revenue not when a customer clicks “purchase” or when a product is shipped, but when a product is actually received by the customer. For a SaaS company, if a customer pays $120 for an annual subscription on January 1, that revenue would be recognised not on a single date, but as $10/month for the subsequent 12 months.
How Stripe Revenue Recognition works
Revenue Recognition provides businesses running on Stripe with:
- Insightful reporting tools: whether they’re a CFO or first-time founder, users can zero in on their company’s performance with reports like balance sheets, income statements, revenue waterfall tables, and more.
- Automatic updates: all transactions and payments changes occurring in Stripe are automatically accounted for in reports. Users can also import non-Stripe transactions.
- Expanded controls: users can adjust reports to accurately account for deferred revenue, exclude certain types of revenue, pass through fees, and many more accounting configurations that align with their business.
- Frictionless integration: Revenue Recognition requires zero IT implementation to get started, and is fully integrated with Stripe’s payments platform, including Stripe Billing and Stripe Invoicing.
- Compliance support: businesses can achieve compliance with global standards like ASC 606 and IFRS 15 with audit-ready statements.
Optimised for fast-growing SaaS businesses
Stripe Revenue Recognition was built especially for fast-growing businesses with subscription-based or recurring revenue models.
“This is a really big deal for companies,” said Vladi Shunturov, Product Lead at Stripe. “No one wants to slow down for tasks that could be automated, especially leaders at high-growth businesses. In my prior company, which I co-founded, we spent ten cents on every dollar dealing with the operational friction of manual revenue management. That’s unacceptable. Now I’m at Stripe and I couldn’t be more excited to help founders, CFOs and finance teams automate their finance operations so they can spend their time and money where it really matters.”
Thousands of early SaaS customers have been using Revenue Recognition to simplify accounting and automate revenue reporting as they scale new heights.