Ratable - Daily Method
Recognized daily over time throughout the service period.
When to use ratable - daily
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.
tip
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 | $ 39.45 | 12 days in July / 365 days total * $ 1,200.00 |
| Aug 2025 | $ 101.92 | 31 days in August | |
| Sep 2025 | $ 98.63 | 30 days in September | |
| Oct 2025 | $ 101.92 | 31 days in October | |
| Nov 2025 | $ 98.63 | 30 days in November | |
| Dec 2025 | $ 101.92 | 31 days in December | |
| Jan 2026 | $ 101.92 | 31 days in January | |
| Feb 2026 | $ 92.05 | 28 days in February | |
| Mar 2026 | $ 101.92 | 31 days in March | |
| Apr 2026 | $ 98.63 | 30 days in April | |
| May 2026 | $ 101.92 | 31 days in May | |
| Jun 2026 | $ 98.63 | 30 days in June | |
| Last period | Jul 2026 | $ 62.46 | Remaining revenue |
| Total | $1,200.00 |