Does anyone have a good excel template for software revenue recongnition?

Many emerging companies start off by managing their revenue recognition in spreadsheets. The reason for this is that the complexities of revenue recognition aren’t handled by the vast majority of ERP/accounting systems. At some point, however, most companies will find that they need to replace their spreadsheets with a system that can better manage the complexity, both from transaction volume and as a consistent application of revenue principals.

So, for now, when you think about building a spreadsheet, think along systematic lines. You want something that will help you both at this early stage of your growth, and in the future when you may want to add a revenue recognition management application.

Think about the need to meet the following steps:
1) Capture the defined sale. This can be challenging or not - depending on how you are collecting the data. If you have - for example - subscription(s) and a setup fee and some training or services you need all of that data together in your spreadsheet (even if it is multiple invoices or orders in your internal system). You also want to capture enough of the information about the source transactions to be able to go back to them to support audits or other requirements.

2) Format the defined sale for revenue recognition. This includes assigning rules to the various elements of your sale (for example amortize over a period of time or hold for a pending event) as well as any MEA (multi-element arrangement) required items (like the fair value of the elements and enough data to show the re-allocation of the sale total based on the required allocation model). You will want enough data here to prove your calculations - both for revenue recognition as well as transaction re-statement.

3) Manage your deferred revenue sub-ledger. You will need a model to support month to month revenue recognition as well as deferred revenue balance decrementation (if that is a word). Some people manage this by creating a new spreadsheet each month - others by having multiple periods going across the spreadsheet.

4) Think about reporting. Beyond the need to close the month and recognize revenue there will be needs to forecast revenue and to understand other metrics about the data (market segment, trends, new vs. recurring, etc).

Bob Scarborough