Revenue Recognition

revenue recognition in amberflo revenue recognition is an accounting principle that determines when revenue should be recorded under accrual accounting, revenue is recognized when it is earned or when the associated service is consumed this contrasts with cash accounting, where revenue is recorded when payment is received in usage based billing systems—especially those involving prepaid subscription models —revenue recognition can become complex in this model, customers purchase credits upfront and consume services over time to ensure accurate financial reporting, revenue must be recognized gradually over the usage period rather than all at once when payment is collected amberflo’s approach amberflo simplifies revenue recognition by providing detailed reporting for accounts with prepaid subscribers these reports include recognized revenue the portion of prepaid value consumed during a given month deferred revenue the remaining prepaid balance that has not yet been used this helps finance teams allocate revenue accurately across months and align with gaap compliant practices key concepts in amberflo prepaid credits and commitments represent booked revenue metered usage and consumption represent recognized revenue revenue is tracked and reported at a granular level, including by customer, sku, and consumption type integration with financial systems amberflo provides structured data for integration with downstream systems such as netsuite specifically prepaid transaction and commitment amounts can be mapped to revenue bookings total metered charges (recognized revenue) breakdown of usage covered by prepaid credits versus overagesline items grouped by sku reporting and api access amberflo also offers apis to support recognized revenue dashboards revenue waterfall reports detailed breakdowns by meter and billing period for api documentation, see usage cost api https //docs amberflo io/reference/usage cost example use case annual commitment with monthly overages imagine a customer agrees to a $50,000 annual commitment , with any overages billed on a monthly basis a $50,000 credit is created in amberflo this amount represents the booked revenue as the customer consumes services throughout the year, amberflo tracks and reports recognized revenue based on actual usage the system also calculates the remaining deferred revenue , reflecting the unused portion of the commitment amberflo’s billing dashboards and invoices show how much usage has been consumed from the credit balance how much credit remains the breakdown between recognized and deferred revenue since billing occurs monthly, if the customer exceeds the credit balance during any given month, the overage amount is automatically billed to the customer’s payment method