Blue Onion Revenue Recognition Journal Entries
Blue Onion's Revenue Recognition journal entries track and calculate the amounts that need to be transferred from the deferred revenue account to the income statement as recognized revenue. This includes:
Deferred revenue from new sales
Shipping charges, and
Discounts
Amounts to be recognized based on order fulfillment (ecommerce) or passage of time for valid subscriptions (SaaS)
This data is broken down in detailed reporting, with the ability to view aggregated amounts or drill down to the transaction level across:
Multiple Shopify or Amazon stores
Sales channels/order sources (e.g. Shopify, Amazon stores)
Locations
Individual products/SKUs
Automated Revenue Recognition in NetSuite
To streamline operations, Blue Onion pushes these pre-calculated revenue recognition journal entries into NetSuite automatically as summarized Cash Sale transactions, on a daily basis. This allows for:
Clearing the daily fulfillments or subscription values out of the deferred revenue liability account.
Recognizing the revenue on the income statement.
Calculating cost of goods sold (COGS) and make inventory adjustments at the product/SKU level.
The Cash Sale transactions contain:
A line item for each SKU/product sold, with quantity and amounts calculated from actual sales
The net amount for each line, matching the amount the customer paid for all sales of certain SKU by day
Specific location details to handle multi-location/multi-subsidiary businesses and costing
This level of detail flows through to the general ledger, recording not just the top-line revenue number, but also COGS, inventory adjustments, and utilizing the appropriate subsidiary/location segments within the GL impact in NetSuite.
Benefits
By automating revenue recognition entries, Blue Onion helps companies:
Reduce manual effort and risk of errors in recording revenue
Accurately record COGS and inventory adjustments by location and SKU
Match revenue recognition timing to business requirements
Reduce clutter in NetSuite by summarizing daily transactions
Easily drill down into transaction details through the Blue Onion platform
This seamless integration between Blue Onion and NetSuite provides a robust and scalable process for recognizing revenue while ensuring accurate reporting across all business segments.