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How Subscription-Based Businesses Manage and Analyze Earned Income
May 26, 2021
Analyzing your earned income is an important part of any business. But, reporting earned revenue for subscription-based companies presents its own set of complexities. If you operate on a cash basis, reporting may simply be based on the cash received each day or month. This information is readily available by running a Deposit Report, Payments by Batch Report, or the General Ledger by Account Number Report for your cash accounts. However, if you are operating on an accrual basis, then analyzing your earned revenue becomes critical. Publishers need access to the details behind the earnings each and every day to aid in forecasting and decision-making. This can be based on a product or product line, the type of subscriber, the location of subscribers, and more.
Managing Earned Income with Multipub
To support Multipub clients, our platform follows Generally Accepted Accounting Principles (GAAP). Revenue is earned as your obligations are fulfilled. This can be based on either allowing access to content on a day-to-day basis or by sending your product to subscribers via email or print. In either scenario, Multipub actually earns revenue by posting debits and credits to the appropriate General Ledger accounts. This means each time an issue is served, a product is shipped, or access to online content is available, Multipub recognizes revenue by posting credits to the earned income accounts. As orders are canceled or adjusted, revenue adjustments may be necessary. These transactions are automatically posted to income or bad debt, based on your system policies and setup.
Conducting an Earned Income Analysis
To analyze your earned income, there are several different reports that provide visibility into the source of your earnings. These include:
- Earned Income by Issue Report: This report analyzes all subscribers for each product and for each issue and tallies the amount of revenue earned for each subscriber for the issue.
- Earned Income by State Report: This report analyzes all the earned revenue journal entries and includes many different demographic fields for each order. In addition to basic fields like product and rate or new and renewal, this report also shows order information, like the subscriber’s state, customer type and sub-type, area of interest, and distribution format.
- General Ledger Distribution Report: The General Ledger Distribution Report is a staple in the suite of Multipub accounting reports. It shows all entries to all general ledger accounts for each transaction.
- General Ledger by Product: If you want to simplify the GL Distribution Report to examine only a single product, you may choose to run the General Ledger by Product report.
- General Ledger by Account: Similarly, if you want to examine a single GL account, like just the new earned income or the renewal deferred income accounts, you may run the GL by Account Number report.