Close & reporting
Revenue recognition (ASC 606 / IFRS 15)
Revenue recorded when it is genuinely earned rather than when cash lands, following the five-step model under IFRS 15 as endorsed by SOCPA, so a Saudi company's subscriptions, retainers or multi-part contracts are recognised correctly each month rather than on invoice date by default.
Management report
Illustrative client · August 2026
SAR
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
The question behind every contract
Under SOCPA-endorsed IFRS, revenue recognition always comes down to one question: which performance obligation has genuinely been delivered this month, and what share of the contract price belongs to it. We work every contract through the IFRS 15 five-step model rather than defaulting to the invoice date.
Working through the five steps
Each contract is split into its distinct performance obligations, the transaction price allocated across them, and a month-by-month recognition schedule built against the contract's term. Deferred and unbilled revenue is tracked against that same schedule, and a short memo records the judgement behind any contract that is not straightforward.
It shows up outside software just as often
A consulting firm running retainer arrangements, or a trading company on a long-term supply contract, hits the exact same question as a subscription business, just less obviously. Multi-year contracts, bundled deliverables and upfront fees tied to ongoing work all need a schedule, whatever industry the business sits in.
Running on a different clock from VAT
A Fatoora invoice can trigger a VAT tax point under ZATCA's rules well before the matching revenue is actually released from the recognition schedule for reporting purposes, so we track the two on separate timelines rather than assuming they move together. A senior reviewer checks the schedule each month before it reaches you.
Questions
Frequently asked questions: Revenue recognition (ASC 606 / IFRS 15)
How do you treat a contract with several distinct deliverables?
Each performance obligation is identified separately and the price allocated across them, rather than recognised as one lump sum on invoice date.
Does revenue recognition timing change our VAT return?
Not automatically. VAT follows the invoice or payment tax point under ZATCA's rules, which can land before or after revenue is released under IFRS 15. We track both on separate timelines.
Does this apply to a consulting retainer, not just subscriptions?
Yes, any recurring or bundled contract, a consulting retainer or a multi-year supply agreement included, runs through the same five-step model.
Does this apply outside of software subscriptions?
Yes. Any business with multi-year contracts, bundled products and services, or upfront fees tied to ongoing delivery needs a recognition schedule, not only SaaS companies.
What is the difference between deferred revenue and unbilled revenue?
Deferred revenue is cash collected before it is earned. Unbilled revenue is the reverse: work delivered before an invoice goes out.
How do we get started with revenue recognition (ASC 606 / IFRS 15)?
Getting started with revenue recognition (ASC 606 / IFRS 15) begins with a short review of your current records and software access. Once that is done we confirm scope and timing in writing, and ongoing work begins on the schedule agreed with you.
What if our records for revenue recognition (ASC 606 / IFRS 15) are not up to date?
If your records are behind, we scope a catch-up first so revenue recognition (ASC 606 / IFRS 15) starts from a clean, reconciled base. That catch-up is priced and timed separately from the ongoing engagement, so you always know what each part costs.
Related services
- Close & reportingDeferred revenueCash collected before it is earned tracked separately from revenue and released to the profit and loss on the schedule that matches when the work is actually delivered.
- Close & reportingUS GAAP conversionBooks moved from cash basis or another framework onto US GAAP accrual accounting, with every adjustment documented so a lender, investor or auditor can follow the trail.
Industries
Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.