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Revenue recognition reads your billing data and applies Lago’s logic automatically. You don’t configure recognition rules, but the billing inputs you already control determine what gets recognized and when. Getting them right is the whole job.

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What drives recognition

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A short checklist

1

Service periods reflect reality

Confirm subscription periods and any one-off fee windows match the service the customer actually receives.
2

Advance/arrears matches how you bill

Check the pay-in-advance setting on plans and charges, since it determines deferred vs unbilled treatment.
3

Taxes are configured

Make sure taxes are set on customers and plans so recognized revenue stays pre-tax. See Taxes.
4

Commitments and coupons are in place

Verify minimum commitments and any coupons are attached where they belong.
5

Timezone is correct

Your organization’s timezone defines daily and monthly period boundaries. Confirm it’s set correctly.
None of these are revenue-recognition settings. They’re your normal billing configuration. Revenue recognition simply reads them.

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What this means for your reports

Clean inputs mean recognized plus deferred revenue reconciles cleanly against your invoices. If a figure looks off, the cause is almost always a billing input: a wrong service period, the wrong advance/arrears setting, or a missing tax. Start there before anything else.