Daily vs Monthly Revenue Recognition: Which Method to Use
Both methods spread a subscription evenly over its term; they differ in what “evenly” means.
- Daily: amount × days of service in the month ÷ total days. Exact, handles mid-month starts and odd terms, and gives slightly different amounts in 30- and 31-day months.
- Equal months: amount ÷ number of months, starting in the service start month. Simple and stable, and a common policy for monthly-close businesses — but a contract starting on the 28th gets a full month of revenue in its first month.
Example: $12,000 for March 15, 2026 to March 14, 2027
| Daily, March 2026 (17 of 365 days) | $558.90 |
|---|---|
| Daily, April 2026 (30 days) | $986.31 |
| Equal months, every month Mar 2026 – Feb 2027 | $1,000.00 |
| Deferred at Sep 30, 2026 — daily | $5,424.66 |
| Deferred at Sep 30, 2026 — equal months | $5,000.00 |
The difference is timing only; both reach $12,000. Pick one policy and apply it consistently. DeferSheet uses cumulative rounding, so each line's months add up to the invoice amount to the cent.