Stripe, a global technology company that builds economic infrastructure for the internet, has launched Revenue Recognition to millions of users in 40 countries around the world. Recognising revenue is the process of mapping the money businesses make to the correct date (or dates) on an income statement - for example, when a customer receives a product or uses a service, rather than when the customer made a payment. Too often, it is a manual, inefficient, and error-prone process for finance teams.

Stripe Revenue Recognition aims to streamline this process by facilitating three tasks: consolidating transactions in one place, categorising transactions appropriately, and automatically generating advanced, auditable reports. As a result, users can now access a comprehensive view of their financial health, and could save time and money along the way.

"Recognising revenue is all about speed and accuracy," commented Ryan Macpherson, founder and CEO of Coassemble. "Stripe excels at both. We’d literally need to hire two or three bookkeepers if we weren’t using Stripe."

The complexities of accurately recognising revenue

For a company’s leaders and investors, revenue recognition - a key part of Generally Accepted Accounting Principles (GAAP) standards - provides an accurate representation of profits and the ability to comprehend a company’s financials in a standardised fashion.

Maintaining accurate books under this standard can be particularly complex for SaaS, subscription, and e-commerce companies, which are typically paid up front for goods and services that will be delivered in the future or over an extended period of time.

For example, an e-commerce provider would recognise revenue not when a customer clicks 'purchase' or when a product is shipped, but when a product is actually received by the customer. For a SaaS company, if a customer pays US$120 for an annual subscription on 1 January, that revenue would be recognised not on a single date, but as US$10/month for the subsequent 12 months.

How it works

• Revenue Recognition provides businesses running on Stripe with the following:
• Reporting tools: whether they’re a CFO or first-time founder, users can zero in on their company’s performance with reports like balance sheets, income statements, revenue waterfall tables, and more.
• Automatic updates: all transactions and payments changes occurring in Stripe are automatically accounted for in reports. Users can also import non-Stripe transactions.
• Expanded controls: users can adjust reports to accurately account for deferred revenue, exclude certain types of revenue, pass through fees, and many more accounting configurations that align with their business.
• Frictionless integration: the tool requires zero IT implementation to get started, and is fully integrated with Stripe’s payments platform, including Stripe Billing and Stripe Invoicing.
• Compliance support: businesses can achieve compliance with global standards like ASC 606 and IFRS 15 with audit-ready statements.

Targeted at fast-growing SaaS businesses

Stripe says that the new tool was built particularly for fast-growing businesses with subscription-based or recurring revenue models.

"No one wants to slow down for tasks that could be automated, especially leaders at high-growth businesses," said Vladi Shunturov, product lead at Stripe. "In my prior company, which I co-founded, we spent ten cents on every dollar dealing with the operational friction of manual revenue management. That’s unacceptable. I’m a founder-in-exile at Stripe now, and I couldn’t be more excited to help founders, CFOs and finance teams automate their finance operations so they can spend their time and money where it really matters."

Thousands of early SaaS customers have been using Revenue Recognition to simplify accounting and automate revenue reporting.

"Having all of our revenue reporting needs in one system is long overdue," explained Nic Malianni, head of Accounting at Notion. "We are excited to see all that Revenue Recognition can offer. Our accounting teams are constantly challenged with fragmented systems and reporting requirements, this latest tool from Stripe will shift our focus from reconciling systems and creating custom reports to building the business."

As consumers drive the shift toward recurring billing, Revenue Recognition is the latest in a set of seamlessly integrated Stripe tools that maximise revenue and optimise growth as SaaS spending and the subscription economy grow in parallel in the coming years:

• Stripe Tax, which aims to make it easy to calculate and collect sales tax, VAT, and GST. Earlier this year, Stripe also acquired TaxJar to help simplify tax compliance for businesses even further.
• Recent enhancements to Stripe Invoicing including multi-currency support, mobile invoicing, and PDF attachments - all of which help businesses get paid faster.
• Stripe Billing, which is designed to help businesses more easily create and manage subscriptions with flexible billing logic.

Stripe Revenue Recognition is now available in Austria, Australia, Belgium, Brazil, Bulgaria, Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hong Kong, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Lichtenstein, Luxembourg, Malta, Malaysia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, the US, the UK, and the UAE.