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I should clarify: The IFRS statements do not break out the discount in this manner. In accordance with IFRS/GAAP, revenue should be reduced by the amount of the
by ttul 2y ago
I should clarify: The IFRS statements do not break out the discount in this manner. In accordance with IFRS/GAAP, revenue should be reduced by the amount of the discount, not treated as a financing item. However, for internal reporting, particularly to the board, I have found it useful to break out discounts for pre-payments in this manner and to force the CEO to think about pre-paid revenue as “debt” and the inherent discounts as “financing cost”.
- cj 2y agoAppreciate the clarification. That makes perfect sense. I work at a B2B SaaS company that sells $50k contracts, and we don’t offer monthly billing and we’ve done quarterly billing maybe once (for a premium). I could imagine the way you’re thinking being helpful if you offer monthly billing and you have lock in to the point where you know people won’t churn so there’s no major benefit to locking people in for a year.