The difference between Total Billing in Chargebee and Revenue Recognition in Chargebee RevRec comes down to cash-based accounting vs. accrual-based accounting.
1. Total Billing in Chargebee
- This represents the invoiced amount to customers during a specific period.
- It includes all invoices, regardless of whether they are paid or unpaid.
- It reflects the total amount your customers are expected to pay but does not account for when the revenue is earned.
- It's more of a cash-flow perspective—how much you are charging your customers.
2. Revenue Recognition in Chargebee RevRec
- This follows accrual accounting principles, meaning revenue is recognized only when it is earned, not necessarily when it is invoiced.
- If you bill a customer upfront for an annual subscription, RevRec will recognize that revenue gradually over the service period rather than all at once.
- This number aligns with GAAP/IFRS revenue recognition standards to ensure compliance.
Why Do These Numbers Differ?
- If you bill customers upfront, Total Billing will be high, but RevRec will recognize revenue gradually over the subscription term.
- If you issue credits or refunds, they impact recognized revenue but may not immediately reflect in Total Billing.
- Discounts, write-offs, or deferred revenue adjustments also cause variations.
Example Scenario
- January Invoice: You bill a customer $12,000 for a 12-month subscription.
- Chargebee Total Billing (Jan): $12,000
- Chargebee RevRec (Jan): $1,000 (since only one month’s worth is recognized)
This means that while Total Billing shows the total invoiced amount, RevRec provides an accurate picture of when that revenue is earned.
Key Differences
| Feature | Total Billing (Chargebee) | Revenue Recognition (Chargebee RevRec) |
|---|---|---|
| Timing | Immediate (when invoiced) | Over time (as service is delivered) |
| Includes Taxes? | Yes | No (Revenue is net of taxes) |
| Recognizes Discounts? | Yes (on invoices) | Yes (amortized over time) |
| Refund Impact | Appears if credited | Revenue reversed accordingly |
| Prepaid Annual Plan ($1,200/year) | Shows full $1,200 in billing month | Recognizes $100/month for 12 months |