Identify the contract, identify its performance obligations, determine the transaction price, allocate that price to the obligations, and recognize revenue as each is satisfied.

IFRS 15, the international standard, uses the same five steps. In RareMargin, steps 1 to 3 are the contract you enter, and steps 4 and 5 happen automatically, as the table above shows.

By relative standalone selling price: each line gets the share of the contract price that its SSP is of the total SSP, and a line with no SSP uses its own contract amount.

For example, a one-year contract for $30,000 has two lines: the platform subscription, with an SSP of $27,000, and implementation, with an SSP of $6,000.

Amounts are kept in cents, and the allocated amounts always add up to the contract price exactly. A recurring product’s SSP is a monthly price, scaled to the line’s quantity and term; a one-off product’s SSP is per unit.

Each product has a revenue pattern, daily, even by period or point in time, and RareMargin builds every contract line’s schedule from it.

• Daily: revenue follows the number of service days in each month, so a 31-day month earns more than a 28-day one.
• Even by period: each full month earns the same amount, and a partial first or last month earns its share of the days.
• Point in time: the whole amount is recognized on the line’s start date, for example a one-off setup fee.

Each schedule line is dated the last day of its month, or the service end date when that comes first. The lines always add up to the allocated amount, to the cent.

Invoices follow their own billing schedule, monthly, quarterly, annual or upfront, so billing never has to match recognition; the difference sits in deferred revenue.

Contract invoices are issued in advance at the start of each billing period. Issuing one debits accounts receivable and credits deferred revenue, and each schedule line moves its amount from deferred revenue into revenue when it posts.

A control checks continuously that the deferred revenue balance in the ledger equals billings less recognized revenue, so a stray manual entry to the account shows up straight away.

As soon as its date arrives: a background job posts every due schedule line, so revenue is in the books before month-end instead of being booked at the close.

A line dated in a period that is already closed posts in the current period instead, so closed books never reopen. The close checklist’s “Revenue recognition posted” task ticks itself once every line dated in the period has posted.

Terminating a contract in RareMargin keeps the revenue earned through the termination date, cancels the rest of the schedule and voids invoices scheduled after it.

Anything already billed but not yet earned stays in deferred revenue until you refund it or credit it to the customer.

The deferred revenue report, revenue by customer, and the SaaS metrics report with MRR, ARR, NRR and GRR all read the same contracts and posted entries.