OpenUp: Revenue Recognition for Subscriptions
A popular revenue model startups convert to is subscriptions. The subscription model generates revenue by charging customers a recurring fee that is processed at regular intervals. Subscription revenue is built on establishing long-term relationships with customers who will pay regularly for access to the product or service, also called recurring revenue.
According to accounting GAAP standards, a subscription contract can not be recognized as a one-time payment, even if the fee is collected at the beginning of the contract. Subscription revenue recognition takes up-front payments and recognizes them during the subscription period.
As the subscription is used up on a monthly or other basis, you record a debit to unearned revenue and a credit to revenue. This adjusting entry recognizes the reduction of your liability and the increase in your revenue because you have now provided the subscription that was previously paid for in advance.
Oftentimes, startups begin their accounting practice by using a cash basis because it is easy to balance according to their bank statement. However this puts the revenue in jeopardy because it does not meet the GAAP standards. By understanding the differences in accrual approaches, early-stage companies can quickly prepare their financials to be investor ready.
WHAT TO EXPECT:
This hour long webinar will go through the differences of cash versus accrual for revenue recognition, overview on how to convert, and then an open Q&A with an accountant and expert who has helped dozens of startups prepare for proper accounting practices.
DATE, LOCATION, COST
Tuesday, September 14, 2021
12pm – 1pm MDT
Hosted live virtually over Zoom
This program is free to attend.
OFFER TO ATTENDEES
For all entrepreneurs who sign up and attend the live event will be qualified to get 4 free hours to a fractional CFO to review your accounting approach. This is a free service offered by Now CFO.
Meet the Expert:
Chris Badger, Partner, Now CFO
Chris Badger is partner in the Salt Lake City, Utah office for Now CFO. Chris is a hard driving Senior Accounting professional who brings a broad and diverse industry experience to his clients. He has extensive experience in external financial reporting, support for Boards and investor relationships. Chris attended the University of Utah in Salt Lake City, Utah, and obtained a Bachelor of Arts in Accounting as well as an MBA from Keller Graduate School of Business.
In his free time, Chris actively volunteers with the Boy Scouts of America, and VentureCapital.org.
Now CFO provides financial visibility to make smarter business decisions. Now CFO is a proud sponsor of BoomStartup Accelerator.
Tara Spalding, MD at BoomStartup
will be moderating the webinar and encouraging participants to ask questions to Chris.