Being huge fans of freshbooks.com, we’ve incorporated it into our daily workflow as you can see from our previous blog post.
As we’ve matured as a company, we’ve moved from a cash-based model to an accrual-based accounting model. One of the downfalls of freshbooks is the inability to report on revenue recognition. What we’ve cooked up is the ability to recognize revenue as it is being delivered. As a professional services company, we are often paid upfront, or at a minimum, a deposit. At times, we can be cash-heavy, but that cash is still unearned. Below are some demonstrations of what revenue recognition looks like:
This chart shows revenue recognition vs expenses logged in freshbooks. Essentially, anything in-between the green and blue lines is profit.
From there, we are able to easily get a report of recognized profit. Note that this will be different than your standard Profit and Loss Report that Freshbooks will create, as this is profit soley based on services delivered, and not payments received.
Lastly, we have a Liability report which will show the hours and the dollar figure of work undelivered to this point. This helps with resource allocation and decision making for staffing up or down.
That’s about it! Interested in working with us to make your freshbooks sing? Contact us below: