Thursday, November 11th, 2021
As a small business owner, you expect to wear many hats. But why not simplify the job whenever you can? One of the areas that take up a lot of time, energy, and resources is accounting and taxes. According to the results of the National Small Business Association’s 2017 member survey, more than a quarter of small business owners spend over 100 hours per year on their federal taxes alone.
And accounting? 40% shared that they spend over 80 hours per year on this task. Another 40% say bookkeeping and taxes are the worst part of owning a small business.
Thanks to new developments, all of that could change for entrepreneurs. In late September 2021, Stripe Inc., an online payments powerhouse, introduced Stripe Revenue Recognition. This application is intended to automate the mapping of money to a balance sheet. According to Stripe, this development is the direct result of the account needs of merchants and businesses that are paid upfront for goods and services to be delivered in the future or over an extended period of time.
How does it work? Consider, for example, an e-commerce company that would recognize revenue not when a customer clicks “purchase” or the product is shipped, but when it is ultimately received by the customer. Stripe says in instances like this (another example would be subscription models) manual mapping of revenue into a balance sheet results in errors. This then leads to operating inefficiencies and headaches in trying to sort it all out.
Stripe Revenue Recognition provides merchants with an accurate representation of profits. No more confusion. Business owners can easily manage their financial data in a standardized format that is in accordance with GAAP (Generally Accepted Accounting Principles). Less time stressing over numbers, more time focused on other key areas of business operations.
“Recurring-revenue businesses have to account for contract changes such as upgrades, downgrades, prorations, and cancellations, and it can be challenging to ensure accurate recognition of physical or digital goods that are paid for prior to a customer actually receiving them. [In addition], fulfillment and order information have to be reconciled to enable compliant revenue reporting,” explains Vladi Shunturov, product lead at Stripe.
“Part of the challenge is that complexity compounds with scale, just as you’re expanding your business and are focused on growth. Revenue Recognition was built to solve these pain points, and provide a comprehensive view of our users’ financial health in one place,” Shunturov went on to add.
Another big bonus, the app’s reporting tools can quickly generate balance sheets, income statements, revenue-waterfall tables, and other key financial reports.
“Many of our users shared the toll of the countless hours of productivity loss for recognizing contracts, subscriptions, invoices, and transactions across multiple systems,” Shunturov says. “Because Stripe manages most of our users’ revenue data, we felt that this is an area where we can help.”
Finding the Right Payment Provider for Your Business
Utilizing a revenue recognition tool isn’t the only way you can strengthen your business and simplify processes. With the right payment processing provider, you can offer a wider variety of payment processing options to your customers and boost growth. As with any tool, ensuring the provider understands your business type and industry is critical.
With Best Payment Providers, you can easily discover the provider that meets your needs and has the reputation your business deserves. Get the latest industry updates like Stripe Revenue Recognition tool and find everything you need to ensure your business thrives.