How is Revenue calculated?

Last updated: May 18, 2025

Summary

Revenue is a measurement of how much a company earns each month. As this is a GAAP metric, there are well-defined rules for how to compute it, though your accountants may have specific guidelines for how to interpret those rules.

Tabs computes revenue across all generated invoice line items that belong to invoices that are not voided or deleted. When usage data is uploaded or an invoice is modified, revenue adjusts to reflect these changes.

Instructions

  • From Customers > Products, assign Categories to each item you sell

  • From the Revenue page, view the GAAP Revenue report to see how much Revenue is recognized per month per category per month

  • Click View Details to see more about each month’s calculation including the deferred and unbilled balance.  

Calculation

  • To calculate GAAP revenue, Tabs uses the straight-line, equal monthly periods, prorated first and last month method. That is, $600 recognized between Jan 11 and July 10 results in revenue of $68 for Jan ($100*21/31), $100 for Feb-June, and $32 for July ($600 – $68 - $100*5). 

  • Note that months in the middle of your recognition period have the same amount of revenue even though they have different lengths in days. That is, February and March have $100 of revenue each even though February is 10% shorter than March.

  • Revenue is calculated on invoice line items that belong to invoices that have not been voided or deleted. The sum of all flat-priced invoice line items is apportioned across the entire revenue period. Each usage-priced invoice line item is recognized across its service period, which generally aligns with the calendar month. 

Best Practices

  • Revenue on a customer relationship is available as soon as the document is processed. We recommend looking at each revenue period and confirming the dates as soon as possible.

  • Revenue generated by Tabs is shown as a forecast for future months and as actuals for past months but can be edited for any period with open books. 

  • Revenue can be imported from another source but can no longer be edited in Tabs after it is imported.