What is revenue recognition?
Revenue recognition is a fundamental accounting principle that determines when and how revenue is recognized and recorded in your financial statements. Rather than recognizing revenue when cash is received, this method ensures that income is recorded at the time it is earned, reflecting the actual progress of work delivered to your clients.
In BQE CORE, Revenue Recognition enables companies to track revenue in real-time as billable time and expenses are logged, ensuring your financial reports accurately reflect work performed, not just what has been invoiced. To enable and use the Revenue Recognition feature, your company must be set to Accrual Accounting and have Accounting Periods enabled (Settings > Accounting).
Note: Revenue Recognition settings can affect your tax liability. Please discuss with your accountant or financial advisor before enabling this feature.
Why is revenue recognition important?
Without proper revenue recognition, your financial statements might tell an inaccurate story, overstating or understating revenue, misaligning profitability, and disrupting cash flow analysis. It helps you run a more predictable, trustworthy, and audit-ready business. A well-structured revenue recognition process:
- provides a clearer picture of earned income, even before invoicing
- helps in aligning project performance with financial results
- ensures compliance with accrual-based accounting standards
- improves forecasting and reporting accuracy
Billed vs. Billed + WIP Methods
CORE supports two methods of automated revenue recognition, giving companies greater flexibility and control:
- Billed: Revenue is only recognized when an invoice is finalized. This method is ideal for companies that want a traditional, invoice-driven recognition method.
- Billed + WIP: Revenue is recognized as soon as time and expenses are logged (i.e., as WIP) and reversed upon invoicing. This method is perfect for companies that want real-time revenue tracking, even before an invoice is sent.
You can configure your preferred method in Settings > Accounting > Revenue Recognition.
Benefits of revenue recognition
With our automated Revenue Recognition:
- Daily revenue journals are created in the background as time and expenses are logged.
- No manual posting is required; entries are updated automatically throughout the day.
- Upon invoicing, CORE reverses WIP entries and posts recognized revenue through the invoice.
- Financials remain accurate, up to date, and audit-ready.
This automation reduces manual work and aligns financial reports with real-time performance.
Revenue recognition is deeply integrated into several areas of CORE:
- Time & Expense Entry: Automatically generates daily WIP revenue journal entries.
- Invoicing: Triggers reversal of WIP journals and posts final revenue.
- Payroll Processing: Ensures labor costs align with recognized revenue for better profit tracking.
- Write-Offs: Maintains accurate revenue tracking by reversing unrealized income.
With CORE handling your revenue at every step, your business gains a complete and dynamic view of earned value.