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Revenue Accounting Improvement for a Tech Start-Up

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Client Overview

A fast-growing tech start-up registered in the USA, with a UAE-based subsidiary, generating revenue through app subscriptions via the App Store, Google Play, and direct sales from its website.

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Challenge

The start-up faced recurring issues with inaccurate revenue recognition. Subscription revenues were being recorded at the time of cash receipt rather than being recognized over the actual subscription period. This led to:

  • Misstated profits in financial reports
  • Revenue-cost mismatch impacting business insights
  • Excess royalty payments, as royalties were calculated as a percentage of overstated revenue
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Our Approach

We conducted a detailed audit of the revenue streams and implemented a robust revenue recognition framework:

  •  Integrated data from the App Store, Google Play, and Stripe into a revenue accrual model and allocated revenue across the respective performance obligation period
  •  Implemented pro-rata revenue accounting for subscription revenues
  •  Matched revenues with the respective subscription periods and associated costs, including provisions
  •  Revised the royalty calculation model to reflect true earned revenue
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Results & Impact

  • Accurate Financial Reporting

    Monthly and annual profits now reflect true performance

  • Cost Optimization

    Prevented overpayment of royalties, leading to savings

  • Improved Investor Confidence

    Enhanced transparency in financial statements

  • Compliance Ready

    Books now align with GAAP/IFRS standards for revenue recognition

Conclusion

By transitioning to proper revenue accrual practices, the tech start-up gained clarity, compliance, and control over its actual performance and future liabilities arising from its commitment to deliver services over the subscription period—paving the way for smarter decision-making.

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Case Details

Client Type : US-based tech startup with UAE subsidiary
Industry : Tech Startup

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Our Address

Al Deyaar 1 - Office 404 - Al Barsha - Al Barsha 1 - Dubai - United Arab Emirates

Our Phone Number

+ 971 50 2839 209

Email

info@dxrise.com

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