Revenue Streams
Learn about revenue stream transactions - the initial invoices you create when billing customers for products or services.
What are Revenue Streams?
Revenue Streams represent transactions that create new revenue obligations in your accounting system. These are the initial invoices you create when billing customers for products or services.
When you create an invoice (the revenue stream), you:
- Record what customers owe (Account Receivable)
- Create a service obligation (Deferred Revenue)
- Track tax collected (Taxes)
Later, as you deliver the service or product, the deferred revenue gets recognized as earned revenue.
Transaction Types
Subscription invoices created during the month for recurring subscriptions.
When it appears: Customer is billed for a subscription (monthly, annual, etc.)
Affects:
- Account Receivable: Total invoiced (including tax)
- Deferred Revenue: Service obligation (excluding tax)
- Taxes: Tax collected
Examples: Monthly magazine subscription, annual software license, recurring membership dues
eCommerce Revenue
(Coming soon) One-time product purchases and orders.
When it appears: Customer purchases a product or places an order
Affects:
- Account Receivable: Total invoiced (including tax)
- Deferred Revenue: Product obligation (excluding tax)
- Taxes: Tax collected
Examples: Single issue purchase, merchandise order, one-time product sale
How Revenue Streams Work
Step 1: Invoice Created (Revenue Stream)
When you create a $110 invoice ($100 subscription + $10 tax):
| Column | Amount | Meaning |
|---|---|---|
| Account Receivable | +$110 | Customer owes this amount |
| Deferred Revenue | -$100 | You owe $100 of service |
| Taxes | -$10 | You owe tax to government |
| Balance | $0 ✓ | Books balance |
Step 2: Service Delivered (Revenue Recognition)
As you deliver the service over time, deferred revenue moves to recognized revenue:
- Month 1: -$100 Deferred Revenue → +$100 Recognized Revenue
- (Or spread over 12 months for annual subscriptions)
Step 3: Payment Received (Cash Movement)
When customer pays:
| Column | Amount | Meaning |
|---|---|---|
| Cash | +$110 | Money received |
| Account Receivable | -$110 | Customer no longer owes |
| Balance | $0 ✓ | Books balance |
Common Questions
Q: What's the difference between Subscriptions and eCommerce revenue?
A:
- Subscriptions Revenue: Recurring billing for ongoing service (magazines, software, memberships)
- eCommerce Revenue: One-time purchase of products or content (single issues, merchandise, books)
Q: When does an invoice appear in my report?
A: Invoices appear in the month they are created, not when they are paid. Payment is tracked separately in "Payments Received."
Q: Why is Deferred Revenue negative?
A: It's a liability - you owe service to customers. Liabilities are shown as negative numbers. As you deliver service, this liability decreases and becomes recognized revenue (income).
Q: What if a customer doesn't pay?
A: The invoice still appears in Revenue Streams (because you created it and owe the service). Unpaid invoices are tracked separately through Account Receivable. If an invoice becomes uncollectible, it appears in the "Uncollectible Invoices" row.
Updated about 8 hours ago