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Revenue recognition settings are on the Account / Revenue recognition page. They control posting dates, allocation, credit note treatment, and Xero account mapping.
Revenue recognition settings

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Account period locking

Once a month has been closed in your general ledger, no further revenue should post into it. Account period locking enforces this on the Sequence side, so a late invoice or credit note cannot quietly write into a closed month.
The lock applies at journal creation, not at charge generation. Invoices and credit notes can still be issued for dates inside a locked period; they simply post their revenue against the next open period.

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Lock date method

Two options control how the lock date is determined:

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Service periods that span the lock

A service period that begins before the lock and ends after it is not rejected. Sequence allocates revenue for the locked portion to the first open day, then continues recognizing day-by-day from that point. For example, with a lock date of 31 Dec 2025, an invoice covering 1 Dec 2025 to 31 Mar 2026 will:
  • Catch up the December recognition in a single entry on 1 Jan 2026.
  • Recognize January, February, and March normally.
Journal narratives explicitly call out when an entry has been shifted to respect the lock, so the audit trail stays transparent.

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Credit notes against locked periods

Credit note reversals follow the same principle. Anything that would unwind into a locked period is held until the lock end date and catches up on the first open day.

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Allocation strategy

The allocation strategy controls how straight-line revenue is spread across the service period. All three strategies recognize the same total and give every full month an equal amount; they differ only in how the part-months at the start and end of the period are prorated. See Allocation methods for worked breakdowns showing how each strategy splits the same contract.
The setting is exposed on the revenue recognition settings API as allocationPartialProrationStrategy, with values PRORATE_DAILY (Prorate first & last with daily rate), BALANCE_EVEN_MONTHLY (Even months, balance last), or PRORATE_MONTHLY (Even months, prorate first & last). Changes apply to new recognition schedules; existing schedules continue under the strategy they were created with.

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Credit note revenue impact

Credit notes have two distinct effects on previously recognized revenue. The appropriate treatment depends on whether you prefer an immediate adjustment to recognized revenue or a prospective reallocation over the remaining performance period.
The credit note cancels future obligations. Sequence reverses revenue in this order:
  1. Delete any future-dated recognition journals that have not posted yet.
  2. Reverse remaining deferred revenue.
  3. Reverse any already-recognized revenue if the credit exceeds the remaining deferred balance.
What you’ll see in reports: the original invoice stops recognizing further revenue. Recognized + deferred no longer equals net billed, because the cancellation removes future obligations without redistributing the already-recognized portion.Cancellation mode keeps each invoice and its credit note paired. Use it when the credit note represents a true cancellation (e.g., a refund for unused service).
The setting is exposed on the API as creditNoteRevenueImpact, with values CANCELLATION or ADJUSTMENT. See Credit notes for worked examples.
The two modes produce materially different journals. Switching the setting partway through a financial period will create inconsistencies between historical and new credit notes. Confirm and agree the change internally before switching the setting.

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Recognition triggers

Sequence creates recognition journals when an invoice or credit note reaches a state that signals delivery has begun:
  • Issued: the document is finalized and posted, with an accounting (invoice) date assigned.
  • Marked as sent: the document is marked sent without re-issuing (e.g., a previously issued invoice manually marked sent after export). Recognition runs on this transition for both invoices and credit notes, so a document marked sent outside the standard flow still recognizes.
Any subsequent edit that regenerates a credit note’s line items will preserve the recognition method already chosen, so a straight-line credit note stays straight-line rather than flipping to point-in-time mid-life.

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Xero account mappings

If your account has the Xero integration enabled, the settings page also shows the accounts and journal options for posting recognition journals to Xero.
Xero ledger account mappings

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Journal posting

Journal mode controls the state journals arrive in when you push them to Xero.
  • Draft (default): journals are created unposted, for review in Xero before they affect the general ledger.
  • Posted: journals are created in their final state and affect the general ledger straight away.

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Ledger accounts

Map the Xero ledger accounts each journal entry should hit:
  • Deferred revenue accounts: hold billed but not yet earned revenue (the liability side).
  • Recognized revenue accounts: hold earned revenue (the income side).
  • Unbilled revenue accounts: hold earned but not yet invoiced revenue (used for billing in arrears).
  • Clearing account: a single temporary holding account that connects Xero’s automatic invoice journals to Sequence’s recognition journals.
Each journal entry takes its Xero account code from the per-product mapping for that ledger account, managed on the product itself. Deferred, recognized, and unbilled accounts can be overridden per product; the clearing account is a single shared account for the whole workspace. See Xero integration for the full setup, including the clearing account, allocation and recognition journals, and currency handling.