- White Paper: Revenue Recognition Primer for a Professional Services Organization
White Paper: Revenue Recognition Primer for a Professional Services Organization
As a professional services business grows the proportion of revenue generated by larger projects rather than simple time-hire contracts increases, and the proportion of these projects undertaken on a fixed price basis usually increases as well. This introduces complexity into a business: rather than recognise revenue based on cash received or invoices sent out, the revenue in your monthly P&L for a piece of work should reflect the level of completion, the risk of additional costs and the risk of not getting paid.
Revenue recognition can seem very complicated because there are many factors that affect it. This paper looks to simplify it and outlines a standard approach that will accurately state your revenue position.