Startup Accounting
Recognizing Usage-Based Revenue Under ASC 606
Collated by Harry Prabandham
Curated by Rubric Financial
Last updated
1 / 5
Recognition Follows Delivery
- Under ASC 606, revenue is recognized as you satisfy performance obligations to the customer.
- For usage-based products, the obligation is satisfied as the customer consumes the service.
- That means you generally recognize consumption revenue in the period the usage occurs.
- Cash collected in advance does not become revenue until the underlying usage happens.
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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