Stripe has launched a new tool that helps indie hackers eliminate tedious accounting work and organize their finances.
The news: Stripe on Tuesday debuted Revenue Recognition to help companies map their revenue and sync it to the correct date or dates on a balance sheet, a typically arduous and error-ridden process. Revenue Recognition consolidates transactions in one place, categorizes them, and automatically generates auditable reports. The product now is available to millions of Stripe users in 40 countries.
“This 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. In my prior company, which I co-founded, we spent ten cents on every dollar dealing with the operational friction of manual revenue management.” —Vladi Shunturov, Product Lead at Stripe
The problem: If you’re a solopreneur or lead a small team, you know how time-consuming and costly it can be to understand (and not understand) your company’s financial health. For SaaS and subscription companies, grasping your revenue can be especially complicated as it's becoming common to offer flexible payment options.
Accounting headaches: For example, if a customer cancels an annual subscription before hitting 12 months, you may have to provide a refund, credit, or note the revenue as deferred. Or if you're not issuing a refund, you may bring forward the revenue instead of recognizing it each month. Or perhaps a monthly client wants to go annual or a premium client wants to downgrade their service. Whatever the challenge, it complicates accounting and can eat up your time.
Stripe’s solution: Revenue Recognition provides companies with reports like balance sheets, income statements, revenue waterfall tables, and more. It also automatically updates your books with all transactions and allows founders to adjust reports to accurately account for deferred revenue, exclude certain types of revenue, and pass-through fees. Revenue Recognition integrates with Stripe’s payments platform, billing, invoicing, and can import non-Stripe transactions.
GAAP guidelines: If you’re interested in accepting investment, bringing on a partner, or selling your businesses, you’ll need to be in compliance with Generally Accepted Accounting Principles (GAAP) — especially with understanding your revenue. Stripe said Revenue Recognition helps founders achieve this regardless of if you’re a CFO or first-time founder.
IH accounting mistakes: Indie hacker @NatalieLuneva hosted a conversation on SaaS founders’ common accounting and finance mistakes. You can also hop into the Legal, Tax, and Accounting group to discuss your experience and challenges.
Up and up: Stripe's revenue grew about nearly 70 percent to about $7.4 billion in 2020, according to The Wall Street Journal.
UnionPay partnership: Stripe recently announced it partnered with China-based UnionPay International, one of the world’s largest payment networks. The integration allows businesses in more than 30 markets — including the U.S., Australia, Canada, the U.K., and the European Union — to accept payments from billions of UnionPay cardholders globally. The move is likely to add another digit to Stripe’s $95 billion valuation it earned in March.
Do you have a handle on your revenue recognition? Will you try out Stripe’s new tool? Share your thoughts.