Revenue recognition provides a meaningful and consistent measurement of business performance. In recurring revenue, it is important to match the revenue and the costs incurred to generate that revenue in the same period, regardless of when the seller’s invoice is issued or the customer’s payment is received.
As such, Aria Revenue Recognition provides a representation of account activity—primarily financial transaction activity—so that accounting systems have visibility into the amount of revenue that should be regarded as deferrable, and the amount of revenue that should be regarded as earned in a given period.
When is Revenue Considered Earned or Recognized?
Revenue is considered earned when:
- Clear and objective evidence exists of a buyer/seller arrangement.
- A delivery has occurred or a service has been rendered to the customer.
- A price for a product delivered or service rendered is fixed or determinable.
- A reasonable assurance exists that payment will be collected by the seller.
Note: Cash payments and cash credits are not considered recognized revenue.
The following events must take place before revenue is recognized in Aria:
- General Ledger accounting codes must be configured in Aria.
- Revenue Recognition must be enabled in the Aria database. Please contact Aria Customer Support
for assistance.
- General Ledger accounting codes must be associated with services.
- Services are bundled as part of a plan.
- A plan is purchased account.
- A batch process runs and generates GL tables, which include revenue recognition data.
For compliance with modern account standards like ASC 606 and IFRS 15, Aria Systems supports advanced revenue recognition and compliance with Aria Revenue, by SOFTRAX.
