Ratable - 30/360 Method
Recognized over time where the number of days in a year is considered to be 360 (12 months in a year, each with exactly 30 days).
The ratable 30/360 method is very similar to ratable daily revenue recognition, except that it treats all months as if they have exactly 30 days, which can help make the numbers a little easier to work with.
When to use ratable - 30/360
Ratable revenue recognition is often used for subscription revenue, particularly with longer-term (for example: quarterly or annual) subscriptions.
Ratable revenue, also known as revenue recognized over time, should be used where revenue is recognized as the customer receives value from services provided over a period of time, instead of all at once at the time of sale.
Talk to your accountant or tax advisor!
Your accountant or tax advisor is your best resource for determining how your business should be recognizing revenue.
Example
Let's look at an example for a yearly invoice created on Jul 20, 2025, with
service dates of July 20, 2025 - July 19, 2026 (a one-year term).
| Period | Month | Revenue | Explanation |
|---|---|---|---|
| First period | Jul 2025 | $ 40.00 | 12 days in July / 360 days total * $ 1,200.00 |
| Aug 2025 | $ 100.00 | ||
| Sep 2025 | $ 100.00 | ||
| Oct 2025 | $ 100.00 | ||
| Nov 2025 | $ 100.00 | ||
| Dec 2025 | $ 100.00 | ||
| Jan 2026 | $ 100.00 | ||
| Feb 2026 | $ 100.00 | ||
| Mar 2026 | $ 100.00 | ||
| Apr 2026 | $ 100.00 | ||
| May 2026 | $ 100.00 | ||
| Jun 2026 | $ 100.00 | ||
| Last period | Jul 2026 | $ 60.00 | Remaining revenue |
| Total | $1,200.00 |