Revenue recognition
Revenue recognition is currently in beta. Reach out to the team to learn more.
Sequence’s Revenue Recognition module enables accurate tracking of revenue earned through service delivery to customers. Its primary output is a monthly journal report that details revenue earned in that month, versus amounts billed to customers (e.g. for services that will be delivered or have been delivered in other months). These reports can be customized in granularity and format to align with accounting conventions, facilitating integration of Sequence-generated journals into the general ledger at month end.
Revenue recognition home

What is revenue recognition

Revenue recognition is a set of accounting practices aimed at accurately reporting the revenue that a business is generating over time. Generally accepted accounting principles (GAAP) and accounting standards such as ASC 606 and IFRS 15 hinge on the idea that revenue must be recognized at the time it is earned, that is when a contracted service is delivered to the customer, as opposed to when an invoice is issued or cash is received. These guidelines are a legal requirement for public companies and other entities above certain sizes, but apply broadly for any business who enters into contract with their customers, and are critical to forming a reliable picture of a company’s financial health and trajectory.

Key concepts

Billing vs. recognition timing Revenue recognition distinguishes between when customers are billed and when revenue is actually earned:
  • In-advance billing: Customers are charged upfront but revenue is recognized over time as services are delivered (e.g., annual subscriptions paid upfront)
  • In-arrears billing: Services are delivered first and billed afterwards, with revenue recognized as services are delivered (e.g., monthly usage-based billing)
Recognition methods Sequence supports four recognition methods to match how value is delivered to customers:
  • Straight-line: Revenue divided evenly across the service period (most common)
  • Usage-based: Revenue recognized based on actual usage each period
  • Point-in-time: Full amount recognized on a specific date (e.g., implementation fees)
  • Milestone: Revenue recognized only when milestones are marked as complete
Revenue accounts Sequence tracks revenue through four main accounts:
  • Billed Revenue: Amounts invoiced to customers
  • Recognized Revenue: Revenue earned through service delivery
  • Deferred Revenue: Invoiced amounts not yet earned (for advance billing)
  • Unbilled Revenue: Earned revenue not yet invoiced (for arrears billing)

Frequently asked questions