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
Worked example: Annual subscription with product-level discount
Worked example: Annual subscription with product-level discount
Scenario
- Product: Annual subscription service
- Standard price: $1,200
- Product-level discount: 10% (-$120)
- Net amount: $1,080
- Billing: Annual in advance
- Service period: July 1, 2024 - June 30, 2025 (365 days)
- Recognition method: Straight-line
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On invoice date (July 1, 2024): Net amount deferred
- Journal: Debit Billed Revenue (+$1,080), Credit Deferred Revenue (+$1,080)
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Daily recognition: Revenue recognized based on actual days in each month
- Base daily amount: $2.96 per day ($1,080 ÷ 365 days)
- Most days: $2.90 recognized daily
- Month-end adjustments: $3.00 on final day to ensure monthly total of $90
- Example for May 2025: 30 days × $2.90 + 1 day × $3.00 = $90.00
Product-level discounts are netted against the product price and recognized using the same method and timing as the underlying product.
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.
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
- Debit: Deferred Revenue (-$3,000)
- Debit: Recognized Revenue (-$3,000)
- Credit: Billed Revenue (-$6,000)
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
- 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.Worked example: Usage-based billing with minimum fee true-up
Worked example: Usage-based billing with minimum fee true-up
Scenario
- Products: Two usage-based products (A and B)
- Monthly minimum: A$100.00
- Actual usage: A$20.00 (Product A only, Product B had no usage)
- True-up required: A$80.00
- Service period: May 2025
- Billing: Monthly in arrears (June invoice)
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During May: Usage tracked but not yet recognized
- Product A usage: A$20.00
- Product B usage: A$0.00
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End of May: Usage and true-up recognized simultaneously
- Usage recognition: Debit Unbilled Revenue (+A$20.00), Credit Recognized Revenue (+A$20.00)
- True-up recognition: Debit Unbilled Revenue (+A$80.00), Credit Recognized Revenue (+A$80.00)
- Total recognized: A$100.00 (meeting minimum requirement)
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On invoice date (June): All unbilled revenue becomes billed
- Invoice total: A$100.00 (A$20.00 usage + A$80.00 true-up)
- Journal: Debit Billed Revenue (+A$100.00), Credit Unbilled Revenue (-A$100.00)
True-up fees use point-in-time recognition because the service period has already been delivered, ensuring immediate recognition when the shortfall is identified.