> ## Documentation Index
> Fetch the complete documentation index at: https://docs.sequencehq.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Overview

> Streamline your month end process with automated journal reports

![Revenue recognition](https://mintcdn.com/sequence/mEkhIlLyJGyDgjJd/images/illustration/revrec_cover.png?fit=max\&auto=format\&n=mEkhIlLyJGyDgjJd\&q=85\&s=d64be4d875b4f00ab04964a7e6743dc8)

Sequence's revenue recognition module produces the journals that move billed amounts into recognized revenue across the service period. The primary output is a monthly journal report you can post directly into your general ledger.

Reports can be customized in granularity and format to match your accounting conventions and downstream system.

![Revenue recognition home](https://mintcdn.com/sequence/kw8O-QAyxJLIUkK_/images/product/revrec/overview.png?fit=max\&auto=format\&n=kw8O-QAyxJLIUkK_\&q=85\&s=3766d1c2cfdbd752b7d08dead5c785ba)

Sequence implements revenue recognition in line with ASC 606 (US GAAP) and IFRS 15 (IFRS), with equivalent treatment under FRS 102 §23 for UK SMEs.

## Key concepts

**In-advance and in-arrears billing**

Revenue recognition distinguishes between when customers are billed and when revenue is earned:

* **In-advance billing**: customers are charged upfront and revenue is recognized over time as services are delivered (e.g., annual subscriptions paid upfront).
* **In-arrears billing**: services are delivered first and billed afterwards, with revenue recognized as services are delivered (e.g., monthly usage-based billing).

**Recognition methods**

Sequence supports four recognition methods:

* **Straight-line**: Revenue divided evenly across the service period (most common).
* **Usage-based**: Revenue recognized based on actual usage each period.
* **Point-in-time**: Full amount recognized on a specific date (e.g., implementation fees).
* **Milestone**: Revenue recognized only when milestones are marked as complete.

For straight-line specifically, you can choose between three **allocation strategies**, which differ only in how the part-months at the start and end of a contract are prorated. See [Recognition methods](https://docs.sequencehq.com/revenue-recognition/recognition-methods.md#allocation-methods) and [Settings](https://docs.sequencehq.com/revenue-recognition/settings.md#allocation-strategy).

**Revenue accounts**

Sequence tracks revenue through four main accounts:

* **Billed Revenue**: Amounts invoiced to customers.
* **Recognized Revenue**: Revenue earned through service delivery.
* **Deferred Revenue**: Invoiced amounts not yet earned (for advance billing).
* **Unbilled Revenue**: Earned revenue not yet invoiced (for arrears billing).

**Account period locking**

Once a month is closed, Sequence can prevent any further journals from posting into it. Two methods are supported: lock against each invoice's accounting date, or set a single fixed lock date for the whole account. See [Settings](https://docs.sequencehq.com/revenue-recognition/settings.md#account-period-locking).

**Credit note behavior**

Credit notes either **cancel** future obligations or **adjust** previously recognized revenue, depending on a per-account setting. The two modes produce visibly different journals. See [Credit notes](https://docs.sequencehq.com/revenue-recognition/credit-notes.md) for the trade-off and worked examples.

**Credit grants**

Prepaid credit grants reduce recognized revenue as they're consumed, so revenue isn't double-counted when an invoice is settled by a grant balance. See [Credit grants](https://docs.sequencehq.com/revenue-recognition/credit-grants.md).

## Frequently asked questions

> [accordion] Which recognition method should I use for each contract type?
>
> * **Straight-line**: subscriptions and fixed-fee services delivered evenly over time.
> * **Usage-based**: API usage, data processing, consumption billing.
> * **Point-in-time**: setup fees, implementation services, one-off deliverables.
> * **Milestone**: project work with specific deliverables tied to acceptance.

> [accordion] How are product-level discounts handled in journals?
>
> Product-level discounts are netted against the product's price within the same journal entry. A \$1,200 subscription with a \$120 discount generates one journal for the net \$1,080.

> [accordion] How are invoice-level discounts allocated across line items?
>
> Invoice-level discounts are allocated across line items in proportion to each line's list price. Each line then recognizes its net amount on its own schedule.

> [accordion] Can I lock a closed accounting period?
>
> Yes. Account period locking prevents new journals from posting into a closed month. Use each invoice's accounting date as its lock floor, or set a single custom lock date for the whole account. Invoices and credit notes can still be issued for locked periods; they post their revenue against the next open period. See [Settings](https://docs.sequencehq.com/revenue-recognition/settings.md#account-period-locking).

> [accordion] How do credit grants affect recognized revenue?
>
> A credit grant represents revenue that has already been recognized at the point the grant was booked. When the grant is consumed against a subsequent invoice, the recognized revenue for that invoice is reduced by the consumed amount so revenue is not recognized twice. See [Credit grants](https://docs.sequencehq.com/revenue-recognition/credit-grants.md).


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