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→
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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.
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