Revenue recognition methodology

Understanding how Stripe generates revenue recognition information enables you to use our tooling more efficiently. It can also help you reconcile financial information between Stripe and any data that you store on your end.

Revenue recognition modeling

The list below outlines the parameters and data that Stripe uses to calculate revenue.

• Only data sent to Stripe is used for reporting. This means that revenue activity tracked outside of Stripe is not represented in revenue recognition reports.
• Timing
  • All events are calculated using UTC time.
  • Reports are available three days after the end of a month.
• Integration
  • You must set taxes and discounts using the default_tax_rates and discount attributes. If you set taxes and discounts as line items instead, Stripe can’t differentiate the values from revenue, which generates inaccurate reports.
  • Only exclusive tax rates set in the tax field are processed.
• Accounting assumptions
  • Revenue is recognized by the millisecond and is used to calculate a monthly amount that’s distributed evenly over the service period covered by an invoice.
  • Revenue is calculated evenly over the invoice item periods that you set when you create subscriptions. For example, prorations that have service periods that start before they are invoiced are recognized.
  • Recognizable revenue is reported as a net of discounts. For example, an invoice for 50 USD with a 10 USD discount has a recognizable portion of 40 USD.
  • Taxes are not recognizable. ​For example, an invoice for 50 USD with a tax of 5 USD has 50 USD in recognizable revenue and a tax liability of 5 USD. This makes the invoice and accounts receivable totals 55 USD.
  • Revenue recognition reports use invoice item periods that you set when you create subscriptions. Revenue is immediately recognized for payments processed by Stripe that do not go through Stripe Billing and for invoices without an invoice item period set.
  • Partial refunds and disputes are distributed evenly.
• Multi-currency
  • All events are calculated based on your account’s settlement currencies.
  • Events with presentment currencies that are unsupported as settlement currencies are exchanged into your account’s default currency.
  • Finalized invoices calculate amounts with an assumed exchange rate at the time of finalization. Upon payment, the resulting balance transaction dictates the final exchange rate. Any differences between assumed and final rates are added to the FxLoss account.
  • Unbilled invoice items fluctuate based on current market rates.

Report terminology

Revenue recognition reports contain a broad set of information. This includes the accounts that are debited or credited as part of your business activity. To get the most value out of the reports, it helps to understand what accounts are tracked, the type of debits and credits that impact those accounts, and the events that trigger these activities.

Event mapping

There are a few events that trigger debits and credits. Understanding these events can help you understand how revenue flows through your business.

Reversals in debits and credits like DebitDeferredRevenue or CreditAccountsReceivable, are due to negative invoice items. These are often caused by prorations.

Next steps

Review some examples to better understand revenue recognition and our tooling.