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ALPHA FEATURE 🚧Revenue recognition is in alpha. We’re releasing it gradually, account by account, rather than opening it to everyone at once. That lets us validate the figures against real ledgers before a general release.Expect changes while it’s in alpha: the reports, the exports, and the accounting treatment of edge cases may all evolve between releases. Don’t treat the output as final for a statutory close without reconciling it yourself.It also ships as a premium feature. To ask for access for your account, contact us.
Invoicing tells you what you billed. Revenue recognition tells you what you earned. Those are rarely the same number in the same month. A customer who pays $1,200 up front for a year of service hasn’t given you $1,200 of revenue in January. They’ve given you one month of earned revenue and eleven months you still owe them. Revenue recognition spreads that $1,200 across the year so each month shows the revenue you actually earned, no matter when you invoiced or got paid. Lago reads your existing billing data (invoices, subscriptions, usage, payments, credit notes, wallets) and produces the recognized and deferred revenue figures for every period, automatically. There’s nothing to calculate by hand.

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Who this is for

Revenue recognition is built for the people who close the books and report the numbers: finance teams, billing operations, RevOps, and founders who need revenue figures that hold up to an audit and reconcile against the general ledger.

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What you get

Recognized Revenue

The revenue you earned in a period, regardless of billing or payment timing.

Deferred Revenue

Revenue you invoiced in advance but haven’t earned yet.

Revenue Waterfall

How each invoice releases into revenue across current and future periods.

Statements

Balance sheet and income statement views built from your billing activity.

Journal Entry Details

The underlying double-entry lines behind every figure.

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How recognition works, in one line

Lago recognizes revenue when the service is delivered, not when you issue the invoice or collect payment. For anything delivered over time, like a subscription, that means recognizing a little each day across the service period. This is the core principle behind ASC 606 and IFRS 15, the revenue recognition standards used under US GAAP and IFRS. Lago applies it automatically, so the figures you report are built on a standards-compliant basis.
Lago applies the revenue recognition logic automatically based on the billing data available for the period. The recognition method, daily allocation, and accounting treatment are decided by Lago. There are no allocation rules or accounting settings for you to configure.

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Key terms

Define these once and the rest of the section reads easily.

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Where to go next

Methodology

The recognition model in plain language, with a worked example.

Enable revenue recognition

Turn it on and review your first period.

Full lifecycle example

One customer, one month, every moving part.

How it works: Subscriptions

The most common case, billed in advance or in arrears.