> ## Documentation Index > Fetch the complete documentation index at: https://getlago.com/docs/llms.txt > Use this file to discover all available pages before exploring further. # Full lifecycle example > One customer, one reporting period, every moving part. This walkthrough follows a single customer through one reporting period, January 1 to January 31, with every common billing event in play: an advance-billed annual subscription, metered usage, a minimum commitment true-up, tax, a payment, and a credit note. It shows how each event is recognized and how the period looks across all the reports. ## The setup | Event | Date | Details | | ------------------- | ------------------ | --------------------------------------------------------------------------------------------------- | | Annual subscription | Jan 1 | \$1,200 pre-tax, billed in advance, service Jan 1 – Dec 31. Tax 20% (\$240). Invoice total \$1,440. | | Metered usage | Throughout January | 1,000 API calls at \$0.05 = \$50, billed in arrears, invoiced Feb 1. | | Minimum commitment | Jan 31 | \$100 usage commitment. Actual usage \$50, so a \$50 true-up is created. | | Payment | Jan 20 | Customer pays the \$1,440 subscription invoice. | | Credit note | Jan 25 | \$30 service credit issued. | ## Event by event ### The annual subscription The \$1,200 fee is spread daily over the 365-day service period: \$1,200 ÷ 365 ≈ \$3.29 per day. January has 31 days. The \$240 tax is booked to a tax liability on January 1 and is never part of revenue. | Date | Billing event | Invoice amount | Service period | Daily recognized revenue | Recognized in January | Deferred at Jan 31 | | ----- | -------------------------------------- | -------------- | -------------- | ------------------------ | --------------------- | ------------------ | | Jan 1 | Annual subscription invoiced (advance) | \$1,200.00 | Jan 1 – Dec 31 | \$3.29 | \$101.92 | \$1,098.08 | ### The usage The customer's usage is recognized on the days it's consumed, into unbilled revenue, since the usage invoice doesn't issue until February 1. | Period | Billing event | Amount | Recognized in January | Explanation | | ------------------ | ---------------------------------------- | ------- | --------------------- | ------------------------------------------------------------------ | | Throughout January | 1,000 calls at \$0.05, billed in arrears | \$50.00 | \$50.00 | Earned as consumed. Sits in unbilled revenue until invoiced Feb 1. | ### The minimum commitment true-up The customer committed to \$100 of usage but consumed only \$50. The \$50 shortfall is recognized in full when the true-up fee is created on January 31. | Date | Billing event | Amount | Recognized in January | Explanation | | ------ | ------------------- | ------- | --------------------- | ---------------------------------------------------------------- | | Jan 31 | True-up fee created | \$50.00 | \$50.00 | Commitment (\$100) minus usage (\$50), recognized at period end. | ### The payment On January 20 the customer pays the \$1,440 subscription invoice. This moves \$1,440 from receivable to cash and does **not** change recognized revenue. | Date | Billing event | Recognized revenue impact | Balance-sheet impact | | ------ | ------------------------ | ------------------------- | -------------------- | | Jan 20 | \$1,440 payment received | None | Receivable → cash | ### The credit note On January 25 you issue a \$30 service credit. It reduces recognized revenue by \$30 in January, the period it's issued. | Date | Billing event | Recognized revenue impact | Explanation | | ------ | ----------------------- | ------------------------- | ----------------------------------------------------------------- | | Jan 25 | \$30 credit note issued | −\$30.00 | Contra-revenue, booked in January. Earlier days are not restated. | ## The period totals Adding up the recognized revenue for January: | Revenue type | Amount | | ------------------------------- | ------------ | | Subscription (recognized daily) | \$101.92 | | Usage (recognized as consumed) | \$50.00 | | Minimum commitment true-up | \$50.00 | | Credit note (contra-revenue) | −\$30.00 | | **Recognized revenue, January** | **\$171.92** | And the balances at January 31: | Balance | Amount | Why | | ---------------- | ---------- | --------------------------------------------- | | Deferred revenue | \$1,098.08 | The unearned part of the annual subscription. | | Unbilled revenue | \$50.00 | January usage, not yet invoiced. | | Tax liability | \$240.00 | Subscription tax, owed to the authority. | | Cash | \$1,440.00 | The subscription payment received. | ## How each report reflects this | Report | What it shows for January | | --------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | | [Recognized Revenue](/docs/guide/revenue-recognition/reports/recognized-revenue) | \$171.92 total, broken down by type, with the credit note as −\$30. | | [Deferred Revenue](/docs/guide/revenue-recognition/reports/deferred-revenue) | \$1,098.08 remaining on the annual subscription. | | [Revenue Waterfall](/docs/guide/revenue-recognition/reports/revenue-waterfall) | The \$1,200 subscription releasing \$101.92 in January and the rest across February to December. | | [Statements](/docs/guide/revenue-recognition/reports/statements) | Income statement: \$171.92 net revenue. Balance sheet: deferred revenue, unbilled revenue, tax liability, and cash as above. | | [Journal Entry Details](/docs/guide/revenue-recognition/reports/journal-entry-details) | Every line: daily subscription recognition, daily usage, the true-up, the payment, and the credit note. | ## The takeaways * Recognized revenue (\$171.92) has little to do with what was invoiced (\$1,440 subscription) or collected (\$1,440). It reflects what was **earned** in January. * Recognized plus deferred for the subscription (\$101.92 + \$1,098.08) equals the \$1,200 pre-tax invoice. * Tax (\$240) never touches revenue. * The payment moved cash without moving revenue. * The credit note reduced revenue only in the period it was issued.