Gross vs. Net Revenue (Principal vs. Agent)
Written by Harry Prabandham
Curated by Rubric Financial
Last updated
1 / 5
Gross or Net: The Question That Moves Your Top Line
- Reporting revenue gross (the full amount a customer pays) versus net (only your cut) can change reported revenue several-fold.
- The answer turns on one ASC 606 question: are you the principal or the agent in the transaction?
- Getting it wrong is a classic diligence finding, and correcting it can slash a headline revenue number.
- Marketplaces, resellers, and platforms that pass payments through are most at risk of overstating.
Go deeper on this topic: SaaS Revenue Recognition Under ASC 606: A Founder's Guide to Getting It Right→
Related Resources
Lease Accounting Under ASC 842
A guide to ASC 842 for startups, explaining how to put office and equipment leases on the balance sheet as a right-of-use asset and lease liability.
Startup AccountingRefunds, Credits, and Clean Reconciliation
How to record refunds and credits correctly so revenue, cash, and customer balances always reconcile in the books.
Startup AccountingAccounts Payable & Vendor Management
Set up AP workflows, negotiate payment terms, and manage vendor relationships to optimize cash flow.
About the author
Harry PrabandhamFounder & CEO
Founder and CEO of StartupCFO. MBA from Wharton, MS in Computer Science, and decades of experience building and advising venture-backed startups.
More articles by Harry →Related tools and reading
Burn Rate Calculator
Gross burn, net burn, and burn multiple from your monthly cash flows.
GuideWhat Belongs in SaaS COGS and How to Compute Gross Margin
A practical guide to defining SaaS cost of revenue and calculating gross margin correctly, including AI inference costs and benchmarks.
InsightStartup CFO Digest: Week 35, August 2026
This week's funding landscape reflects a clear bifurcation: specialized capital flowing aggressively into infrastructure, hardware, and AI-native operations, while unit economics and profitability are becoming hard moats for founders competing for investor attention. The parallel acceleration of agentic AI adoption highlights a critical tension between speed-to-value and governance risk that needs to be front-and-center in your financial and operational planning.
GlossaryARR (Annual Recurring Revenue)
Annualized value of your subscription revenue at a point in time.
Free toolStartup Valuation Calculator
Berkus, Scorecard, and VC method estimates for pre-revenue startups.
InsightHow We Run Our Own Finance Practice on AI
Every early-stage startup needs a finance team and almost none can afford one. So we changed how the work runs: tested code does the arithmetic, AI drafts the explanation, and an expert signs every number before it leaves. The software can be duplicated; trust cannot. A 20-minute walkthrough of the practice we run on ourselves.
Want your books handled properly?
A bookkeeper and CPA who work as one team, with your monthly close done and your ledger ready for diligence.
No spam, ever. If the download doesn't start, email us.
Or talk it through:
