Update on Revenue Recognition for Unfulfilled Sales
As of October 1st, 2023, Retail POS (X-Series) has updated the way it recognizes revenue. Revenue will now be recognized when the item is paid in full, not when order fulfilment is completed. This will have an impact on the register closure report in Retail POS, and on the register closure files that are sent to Xero or QuickBooks if applicable to your business. Any payments made prior to full payment will now be represented as a liability. As a result of this change, there are two things you should be aware of:
Revenue will be recognized sooner: As of October 1st, 2023, any sales that were paid in full, but not yet fulfilled, will now be recognized as revenue right away. You may see a higher amount of revenue on this date than you’d usually expect. This will be a one time event.
Comparing register closure with accounting integration: As of October 1st, 2023, all of your past and present register closure reports in Lightspeed Retail will be updated to show revenue and liabilities for unfulfilled sales based on the change described above. For register closure files which have already been sent to Xero or Quickbooks in the past, these files will not change, but you should expect these files will be different from what you see in Retail POS. This will only be for files from before October 1st, 2023.
As of October 1st, 2023, all register closure reports in Retail POS and files sent to Xero or Quickbooks will match with the logic of revenue being recognized on payment in full.
Revenue received in advance is an accounting term used to define payments that a company has received in advance of earning them. These payments are recorded as a liability.
In Retail POS, revenue received in advance is found on register closures as Deposits (Revenue received in advance) under the Delivery and Pickup drop-down in the New sales section.
This is comprised of the value of deposits taken on unfulfilled sales.
Once the sale has been fully paid, the deposit amount will be removed from revenue received in advance line and will be added to the revenue line. This will appear on the register closure for the period that the sale is completed.
Xero and QuickBooks Online
For merchants integrated with Xero or QuickBooks Online, revenue received in advance will post to your Xero or QuickBooks Online account as part of the accounts receivable invoice generated by a register closure.