Revenue Recognition
Definition
The rules for when a sale counts as revenue. In general, revenue is recorded when you fulfill your promise to the customer, not when the cash arrives.
Want a deeper explanation?
For most e-commerce brands, revenue is recognized when goods ship or are delivered. Pre-orders, subscriptions, gift cards and consignment all need special care.
The rule matters more than ever when you seek financing or sell. Watch for: payment dates used as sale dates around month-end, which shifts revenue into the wrong period.
Example
A customer pays $90 on March 30, and the order ships April 2. The revenue belongs in April.