SaaS companies typically recognise revenue as they fulfil performance obligations, often on a subscription basis. This involves allocating revenue over the contract term based on the proportion of services delivered. Accurate measurement of progress and determination of transaction price are critical, considering factors like discounts, refunds, and variable consideration. Compliance with UK GAAP or IFRS 15 standards ensures transparency and consistency in reporting revenue. Continuous monitoring of customer usage and satisfaction helps in assessing revenue recognition milestones effectively. Disclosure of revenue recognition policies and methods is essential for stakeholders to understand the financial health of SaaS companies.

Maintaining proper documentation and audit trails supports regulatory compliance and reduces risks of revenue misstatement. Collaboration between finance, sales, and legal teams ensures alignment in revenue recognition practices and adherence to contractual obligations. Adaptability to evolving business models and technological advancements requires periodic review and adjustment of revenue recognition policies to reflect market changes accurately.