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Revenue Recognition
Revenue recognition, straight from billing
Lago turns invoices, usage and credit notes into the revenue you earned, period by period.
The Revenue recognition app shows $209,684.45 of revenue recognized in 2025 through Dec 14, 2025, month by month, with December still open. The revenue waterfall then groups invoices by booking month: February's $44,754.18 of bookings, including an annual Enterprise contract, has $39,705.75 recognized and $5,048.43 still deferred. Finally, the balance sheet at Dec 14, 2025 holds $283,096.61 of assets, $73,412.16 of liabilities including $61,644.80 of deferred revenue, and $209,684.45 of recognized revenue, which balance.Five reports, one set of books
Recognized revenue, deferred revenue, the waterfall, statements and journal entries. All built from the billing data already in Lago.
An interactive recognized report from the Lago revenue recognition app, on an illustrative ledger of eleven customers through Dec 14, 2025.
Recognized revenue
Recognized revenue$209,684.45
Closed
OpenJan. 1, 2025Dec. 31, 2025
$27.6k$0.0
Earned when delivered
The service period drives recognition, not the invoice or payment date. Daily for time-based service, at consumption for usage.
Always pre-tax
Tax is booked as a liability you owe the authority. It never counts as revenue.
Closed months stay closed
Credit notes, disputes and true-ups land in the period they occur. Earlier periods are never rewritten.
Every figure traces to a journal entry
Each billing event becomes a balanced double-entry record. Recognized plus deferred revenue always ties back to what you invoiced.
The journal entry booked by Northwind Analytics's December invoice:
Journal entry booked by Northwind Analytics's invoiceOn 2025-12-01, accounts receivable is debited $1359.85, deferred revenue is credited $1249.00 and tax liability is credited $110.85, for service from 2025-12-01 to 2025-12-31.
{
"journal_entry": {
"date": "2025-12-01",
"source": "invoice",
"service_period": "2025-12-01/2025-12-31",
"currency": "USD",
"debit": {
"accounts_receivable": "1359.85"
},
"credit": {
"deferred_revenue": "1249.00",
"tax_liability": "110.85"
}
}
}From invoice to earned revenue.
Ready for the close.
No allocation rules or account mappings to configure.
Lago applies the recognition logic to your billing data.
Daily recognition
$50.00 monthly fee, billed in advance on Jan 1
$1.61recognized a day, from deferred revenue
Recognized to dateDeferred remaining
- Recognized at Jan 31
- $50.00
- Deferred at Jan 31
- $0.00
A $50.00 monthly fee invoiced in advance on January 1 starts in deferred revenue. Lago recognizes about $1.61 each day of January, so deferred revenue drains to zero by January 31, with the final day absorbing the rounding.
Recognized day by day.Each fee is split evenly across the days of its service period. Monthly and annual figures are the days added up.
Resources
Billing is mission-critical. Lago is engineered for the realities of high-volume enterprises.
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Powering fast-growing AI scaleups.And global enterprises.
See how ambitious teams build and scale their billing with Lago.
Frontier AIRevenue Recognition FAQ
Revenue recognition turns the billing data already in Lago (invoices, subscriptions, usage, payments, credit notes and wallets) into accrual-basis revenue for every period. Invoicing tells you what you billed. Revenue recognition tells you what you earned, which is rarely the same number in the same month.