Revenue recognition handles complex billing scenarios automatically. This guide covers discounts, credit notes, one-time invoices, and minimum fees.

Discounts

Discounts reduce the transaction price according to ASC 606/IFRS 15 guidelines. Sequence supports two types of discounts with different recognition treatments.

Product-level discounts

Product-level discounts appear as negative line items within an existing line item group. They’re netted against the product’s price and recognized using the same method and service period. Example: $1,200 annual subscription with 10% discount
  • Standard price: $1,200
  • Discount: -$120 (within same line group)
  • Net recognition: $1,080 over 12 months using straight-line method

Invoice-level discounts

Invoice-level (global) discounts are separate line item groups with negative amounts. Sequence automatically allocates these discounts pro-rata across all invoice line items based on their standalone selling price. Example: $1,000 total invoice with $100 global discount
  • Line 1: $800 subscription (gets $80 discount allocation)
  • Line 2: $200 setup fee (gets $20 discount allocation)
  • Recognition: Each line recognizes its reduced amount using its own recognition method
Allocation is based on standalone selling price (SSP) - the transaction price of each line item - ensuring compliance with ASC 606/IFRS 15 standards.
This allocation happens automatically on the invoice date, so each line item’s revenue schedule reflects the discounted amount.

Credit notes

Credit notes reverse previously recognized revenue by undoing transactions from current revenue account balances. The reversal happens immediately on the credit note date.

Credit notes for invoices

When crediting specific invoice line items, Sequence reverses revenue from where it currently sits, prioritizing deferred revenue over recognized revenue. Example: $12,000 annual fee, 9 months in
  • Current state: $9,000 recognized, $3,000 deferred
  • Credit note: $6,000 refund
Journal pattern:
  • Debit: Deferred Revenue (-$3,000)
  • Debit: Recognized Revenue (-$3,000)
  • Credit: Billed Revenue (-$6,000)
This approach ensures deferred revenue (liability) is cleared first, then recognized revenue is reversed for any remaining amount.

Standalone credit notes

Standalone credit notes work like negative invoices and follow normal recognition rules with negative amounts. Example: $500 service credit for future use
  • Credit: Billed Revenue (-$500)
  • Debit: Deferred Revenue (-$500)
  • Future recognition: Monthly credits as services are delivered

One-time invoices

One-time invoices recognize revenue based on their service period and selected recognition method, with sensible defaults.

Default behaviors

Single-day service period: Point-in-time recognition
  • Full amount recognized immediately
  • Common for ad-hoc charges, refunds, or adjustments
Multi-day service period: Straight-line recognition
  • Revenue spread evenly over the service period
  • Partial periods are prorated based on actual days over 365
  • Common for project work or time-based services

Customizing invoice line items

You can override any defaults when editing the invoice:
  • Change recognition method per line item
  • Adjust service periods independently
  • Select different revenue classifications (arrears/advance)

Minimum fees and true-ups

When usage falls short of committed minimums, Sequence automatically generates true-up line items to ensure the minimum spend is met.

True-up creation

When actual usage falls short of the committed minimum, Sequence automatically calculates and adds a true-up line item to meet the shortfall.

Best practices

Discounts: Use product-level discounts when possible for cleaner reporting Credit notes: Review deferred vs. recognized revenue before issuing credits One-time invoices: Set appropriate service periods to match value delivery Minimums: Monitor true-up patterns to optimize minimum thresholds All special cases maintain full audit trails and appear clearly in journal reports for transparency and compliance.

Current limitations

Credit grants: Revenue recognition is not yet supported for credit grants. Credit grants will not appear in journal reports or affect revenue recognition calculations. If your pricing model includes credit grants, please reach out to our team.