Recognized Revenue

What is Recognized Revenue - Shipments?

Use this page to understand how shipment approvals turn deferred revenue into recognized revenue for shipment-based subscriptions.

Recognized Revenue - Shipments represents revenue earned from shipment-based subscriptions as issues or shipments are delivered to customers. Unlike time-based subscriptions, these subscriptions earn revenue when you fulfill specific deliverables (like magazine issues, newsletters, or product shipments) rather than as time passes.

This appears when: You have shipment-based subscriptions (configured with shipments_per_interval > 0) and you deliver/approve those shipments.

Affects:

Deferred Revenue: Decreases (positive adjustment, reducing the liability)
Recognized Revenue: Increases (negative value, representing income earned)

How Shipment-Based Recognition Works

The Basic Concept

Think of it like a magazine subscription with 12 issues:

Customer pays $120 for 12 issues upfront
You owe them 12 magazines (Deferred Revenue: -$120)
Each time you ship an issue, you earn 1/12 of the revenue (Recognized Revenue: -$10 per issue)
After delivering all 12 issues, you've earned all $120

The Calculation Formula

Revenue is recognized by applying the fulfillment ratio to the net invoice amount (excluding tax):

Revenue Recognized = (Shipments Fulfilled in Period / Shipments Per Period) × (Invoice Total - Tax)

Example – 12-Issue Annual Subscription:

Subscription: $120 for 12 issues
January: Delivered issues #1 and #2
Revenue recognized in January: (2/12) × $120 = $20

How Shipments Are Counted

The system tracks three distinct shipment states to handle mid-cycle changes and cancellations accurately:

State	Description
Total Consumed	All shipments approved from the start of the billing period to the end of the reporting month.
Period Specific	Shipments approved strictly within the current reporting month's boundaries.
Historical Offset	Shipments approved prior to the current month — used to prevent double-counting across periods.

Period Boundary Rule

A shipment only triggers revenue recognition if its approval date falls within the active invoice period:

period_start ≤ approved_at ≤ period_end

Shipments approved outside this window are treated as follows:

Shipment State	Condition	Financial Impact
Early Approval	`approved_at < period_start`	$0 — considered pre-cycle; does not deplete the current invoice's deferred balance.
Late Approval	`approved_at > period_end`	$0 — considered post-cycle; may decrement shipments remaining but earns no revenue from an expired period.
Within Period	`period_start ≤ approved_at ≤ period_end`	Recognized — shipment ratio is calculated and proportional revenue moves to the P&L.

How Shipments Are Tracked

Approval Workflow

When an administrator approves a fulfillment batch:

The shipment's approved_at timestamp is recorded.
subscription.shipments_remaining is decremented.
An audit trail entry is created.
On the next scheduled accounting run, approved shipments are picked up and proportional revenue moves from Deferred to Recognized on the P&L.

Counting Logic

The system counts distinct approved shipments where:

Approval date falls within the subscription's active billing period
Approval date is within or before the reporting month
Subscription is active (not ended or deleted)

Subscriptions Included

A subscription appears in Recognized Revenue – Shipments when all of the following are true:

Shipment-based plan — plan has shipments_per_interval > 0
Configured for shipments — plan's recognized_revenue_type is set to "shipments"
Shipments approved — one or more shipments were approved during the selected month
Active subscription — subscription hasn't ended before the start of the month
Period overlap — subscription period overlaps with the selected month
Not deleted — invoice not deleted
Correct account and currency — matches selected account and currency

Real-World Examples

Example 1 – Monthly Magazine (1 issue/month):

Customer pays $120 for 12 months (12 issues)
January: Issue #1 shipped and approved
Revenue recognized: (1/12) × $120 = $10
Remaining deferred: $110 (11 issues still owed)

Example 2 – Weekly Newsletter (4 issues/month):

Customer pays $40 for 1 month (4 newsletters)
Week 1: Newsletter #1 sent; Week 2: Newsletter #2 sent
After 2 weeks: (2/4) × $40 = $20 recognized
Remaining deferred: $20 (2 newsletters still owed)

Example 3 – Quarterly Publication (4 issues/year):

Customer pays $100 for full year (4 quarterly issues)
Q1: Issue #1 delivered
Revenue recognized in Q1: (1/4) × $100 = $25
Remaining deferred: $75 (3 issues still owed)

Example 4 – Subscription Canceled After 3 Issues:

Original: $120 for 12 issues
After 3 issues delivered: $30 recognized
Cancel and refund remaining: $90 refunded or written off

Advanced Financial Handling

Credit Notes

Credit notes adjust recognized revenue depending on when they were issued:

Current period credit notes: Only the unrecognized portion reduces the deferred revenue balance.
Previous period credit notes: These reduce the revenue base before the shipment ratio is applied, ensuring historical refunds are correctly factored into current earnings.

Edge Case: Mid-Month Cancellations

If a subscription is deleted or canceled mid-month, the system recognizes the entire remaining unrecognized balance (invoice amount minus previously recognized amounts and any credit notes). This ensures no liability remains on the books for an ended obligation.

Edge Case: Gift Subscriptions

Role	Behavior
Donor	Recognition is always $0 — revenue is recognized on the recipient side.
Recipient (100% discount)	Calculation uses `invoice_subtotal` instead of `invoice_total` to correctly value the earned service.

Accounting Columns Affected

Column	Effect	Sign	What It Means
Deferred Revenue	Decreases	Positive (+)	Liability decreasing as issues are delivered.
Recognized Revenue	Increases	Negative (−)	Income earned from fulfilled shipments.

Why negative? In standard accounting, income is recorded as a negative number on reports. The more negative this value, the more revenue you've earned. Recognized Revenue is always the negative mirror of the Deferred Revenue change.

Common Questions

What counts as a "shipment"? Any deliverable unit defined by your plan — magazine issue, newsletter, product batch, digital content release, etc.

What if I deliver multiple issues in one month? Each approved shipment counts individually. Delivering 3 issues in January for a 12-issue subscription recognizes 3/12 = 25% of the revenue.

Can I recognize more than 100% of a subscription? No. The system caps recognition at the total shipments defined in the plan.

What happens if I deliver issues late? Revenue is recognized when the shipment is approved, not when it was originally scheduled. Late deliveries recognize revenue in a later month — provided the approval still falls within the active billing period.

Do credit notes affect recognition? Yes. See Credit Notes above.

What if a subscription is canceled with undelivered issues? Undelivered issues remain as deferred revenue until they are refunded (appears in "Refunds Made"), written off (appears in "Voided" or "Uncollectible"), or eventually delivered late.

Can I see which shipments were recognized? Yes — if you have the appropriate permissions, use the download icon next to this row to export detailed transaction data including shipment dates and amounts.

Summary


What appears here	Revenue earned when issues/shipments are delivered and approved
Formula	(Shipments Fulfilled / Shipments Per Period) × Invoice Amount (ex. tax)
Deferred Revenue	Positive — liability decreasing
Recognized Revenue	Negative — income earned