Revenue recognition – Runway Help Center

Introduction

Revenue recognition in accrual accounting revolves around the idea of recording revenue when it's actually earned, vs. when the payment is received.

Not all revenue is recorded equally. In financial accounting, accrual and cash-basis methods recognize revenue differently. For the purposes of this article, we’ll discuss recognizing revenue within accrual accounting.

This approach is particularly significant for businesses that receive advance payments for services, such as annual service contracts or commissions. For example, if your business offers a year-long service for $12,000, you would record $1,000 in revenue each month over the course of the year, aligning your income recognition with the length of time the service is being delivered.

Here’s how to get started with recognizing revenue accurately in Runway.

Not looking for revenue recognition? Check out these related articles:

Budget vs. Actuals and Versioning

Date Math

Getting started

In the following step-by-step example, we’ll walk you through the process of revenue recognition in Runway, highlighting how it streamlines commission payouts based on contract length.

Prefer to see it in action? Check out the video below.

Note: Before setting up revenue recognition in Runway, be sure to check out our article on date math - a key component of recording revenue with custom date ranges.

Key Steps

Make sure your integrations are set up

Ensure that your Runway database is populated with the latest financial data. This can be done by integrating Runway with your existing CRM system or accounting software, like a QuickBooks account. More on integrations, here.

If necessary, manually enter the data you need that can’t be automatically populated

You can manually copy data into Runway using copy & paste from Sheets or Excel. For more on pulling and copying data with integrations, check out this article.

Set up columns and enter data

Enter your essential financial data in columns, such as sales stage, customer status, and Annual Contract Value (ACV) if not automatically populated.

You can hide or unhide columns to reduce clutter and focus on relevant data.

Add revenue recognition dates

Add columns for the revenue recognition starting date and end date. These dates are critical to determine the duration over which revenue should be recognized.

Calculate monthly revenue recognition

Create a monthly column by adding a new column titled ‘monthly revenue recognition’.

Use a formula that calculates the weighted ACV divided by the date difference between the start and end dates. For help with date math, see here.

This gives you the monthly revenue recognition amount based on the contract length.

Filter and view data in a time series

You can utilize filters based on the revenue recognition start and end dates to analyze certain data in focus.

To see your data in a time series, convert the view to a time series format. This means revenue is recognized only for the duration of the contract and not beyond its end date.

Conclusion

Revenue recognition in Runway simplifies a traditionally complex process, especially when dealing with numerous contracts with varying timeframes.

By automating your integrations when possible, setting up clearly labeled data columns, and building accurate formulas using date math, Runway can recognize revenue in a way that makes sense for your business, reducing your team’s manual workload and helping you focus on more strategic financial planning.

Troubleshooting

Having issues?

My integrations aren’t working

Some integrations can be trickier than others and require a custom setup - check out our articles on setting up integrations and bringing custom integration data into Runway.

I struggle with formulas

We know formulas aren’t intuitive for everyone. For some basics on how to use formulas in Runway, check out writing formulas, date math, or reach out to us for support.

My data is stale / out of date

The last sync button at the top of the integrations page tells you if your data was recently resynced. You can also resync manually by clicking last sync.

Additional Resources

Get in touch with Runway team member