Online payments processor Stripe is launching an integrated revenue recognition tool to automate financial reporting and streamline accounting functions.
Vladi Shunturov, product lead at Stripe, said in a press release emailed to PYMNTS that the revenue recognition tool is a “really big deal for companies.”
“No one wants to slow down for tasks that could be automated, especially leaders at high-growth businesses,” he said.
Shunturov added that in his previous role at the company he co-founded, it cost 10 cents on the dollar to handle the “operational friction of manual revenue management,” which is “unacceptable.”
Stripe’s new revenue recognition tool, which is available to users in 40 countries, was developed to assist fast-growing firms using Software-as-a-Service (SaaS), subscription-based or recurring revenue models.
Revenue recognition entails mapping money earned to the right dates on a balance sheet. When done manually, it is not only inefficient, but often leads to mistakes, according to the company. Stripe’s tool streamlines the processes by merging all transactions in a single location, applying relevant categories and generating automatic, advanced and auditable reports.
“Recognizing revenue is all about speed and accuracy,” said Ryan Macpherson, founder and CEO of Coassemble, adding that his firm would need “two or three bookkeepers” if it hadn’t started using Stripe.
Not only does revenue recognition offer companies an accurate depiction of profits and financials, but it is also a key component of Generally Accepted Accounting Principles (GAAP) standards. Keeping accurate books under GAAP can be difficult for SaaS, subscription and eCommerce firms, since goods are often paid for in advance over a set period.
“We’re moving everything to Stripe, so all of this complex work will disappear,” said Arianna Cesareo, lead accountant at Productboard. “Before Stripe, closing our books meant checking each contract manually and pasting them into an Excel file with a very complicated formula.”
Founded in 2010, Stripe processes hundreds of billions of dollars in transactions for big-name business and tech brands including Google, Uber, Amazon and Zoom. The Silicon Valley firm was valued at $95 billion following a March funding round.