04 / Revenue
Revenue is more than money arriving.
Sales, invoices, earned revenue, customer payments and bank deposits are related events. They do not always happen at the same time.
Money arrives in the bank. Does that make it this month's revenue? Perhaps. It could also be payment for earlier work, an advance for a future obligation, a transfer or a loan.
What are we trying to distinguish?
A sale records an agreement or transaction with a customer. An invoice requests payment. Revenue reflects what the business has earned under the applicable accounting method and rules. A collection is money received, and a bank deposit records where the money landed.
For a simple transaction those events may happen together. In a growing business they often separate. A payment platform can also combine many sales into one deposit and deduct its own fees.
Why the differences matter
If every bank deposit is treated as revenue, reports may overstate sales, miss amounts customers still owe or overlook obligations for money collected in advance. If payment fees disappear into a net deposit, the owner may not see the real cost of collecting money.
We need different views to answer different questions: What did we earn? What have customers paid? What is still outstanding? How much cash is available?
How we build the connection
First we learn each way customers buy and pay. Then we connect the product or service, invoice or sales detail, payment processor and bank activity. We examine refunds, discounts, deposits, merchant fees and open invoices as needed.
The appropriate accounting treatment depends on the facts and the reporting basis. It should not be guessed from the bank feed. These rules become part of a process the accounting team can apply consistently and explain.
A simple example
Illustrative only: customers purchase $10,000 of services through a processor. The processor keeps $300 in fees and deposits $9,700. Depending on the facts and accounting treatment, the records may need to show $10,000 in revenue and $300 in processing costs, not simply $9,700 in sales.
That is why a processor report and a bank statement answer different questions. Each is useful; neither tells the full story alone.
Why we keep checking
New offers, installments, refunds and platform changes alter the flow. Recurring review helps keep the financial record aligned with the way customers actually buy.
Money received is a fact. What that money means requires context.
A question for your business
For every way customers pay you, can someone explain how that payment connects back to the sale and eventually to the accounting records?