Revenue Recognition For Professional Services Organizations

by | May 7, 2019 | PSA, Revenue Recognition

Written by Yanick Abraham

Yanick is a passionate about PSA industry. With more than 12 years of experience in Salesforce Ecosystem, he loves to share his expertise and tips to help consulting businesses to scale faster.

Reading Time:

Revenue recognition is an accounting principle, which refers to how revenue is treated or recognized.

While relatively straightforward in many sectors, revenue recognition can be a particularly complex matter in professional services, due to factors such as work being done under an array of different contract models along with complex deliverables.

Organizations are required to account for billed vs. unbilled receivables and deferred vs. recognized revenue, based upon the specifics of each sales contract.

Generally speaking, there are 6 different models of contract structures that a professional services organization may use. And, often times, they will use different models for various types of clients or projects, resulting in a more complicated revenue recognition process.

  1. Time and Materials Contract Structures
  2. Fixed Price Contract Structures
  3. Not To Exceed Contract Structures
  4. Retainer-Based Contracts
  5. Recurring Service Subscription
  6. Managed Services Contracts

In order to simplify the revenue recognition process, it is becoming increasingly common for professional services organizations to seek out a Professional Services Automation (PSA) solution that has revenue recognition functionality built-in.

How Klient PSA Can Help Simplify Revenue Recognition

With a Professional Services Automation solution such as Klient PSA, organizations can manage complex billing and invoicing situations by configuring rules that completely automate project billing—including fixed fee, billable rates, milestones, installment agreements, and recurring billing types.

Furthermore, users can also manage vendor bills and payments with ease. And, the services organization can recognize project revenue with revenue recognition templates and calculation methods. This allows the services organization to create multiple recognition rules per contract and project and simplify the process of revenue recognition.

Get your “Psa made simple” free guide!

Do you know why a PSA platform is a must to grow your consulting business? Read the “PSA MADE SIMPLE” to discover 9 reasons why you should consider Klient PSA.


Related Articles
Salesforce Economy Will Create 9.3 Million Jobs by 2026!

Salesforce Economy Will Create 9.3 Million Jobs by 2026!

For those who have followed Salesforce through the years, they know the #1 CRM in the world always set ambitious goals in terms of growth. Here's some highlights: Produce $1.6 trillion in new revenues for customers by 2026. They Expect to grow partner revenues to 3.5...

© Copyright 2022 Klient, Inc. All rights reserved. (Various trademarks held by their respective owners)