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HubSpot Guide to Calculating Revenue Recognition and Setting Up Calculated Properties

Step-by-step instructions for recognizing revenue from multi-year contracts and creating formulas in HubSpot

This guide provides clear instructions for calculating recognized revenue in HubSpot, especially for multi-year contracts, along with steps to set up calculated properties for efficient project tracking and reporting.

Calculating Recognized Revenue for Multi-Year Contracts

Effectively managing revenue recognition in HubSpot involves a few key steps:

Step 1: Define Contract Inputs

Start by specifying the essential details of the contract:

  • Total Contract Value: Enter the total amount agreed upon in the contract.
  • Start Date: Indicate when the contract becomes effective.
  • End Date: Indicate when the contract expires.

Step 2: Calculate Contract Duration

Next, calculate the duration of the contract:

  • Determine the length in months by finding the difference between the start and end dates.

Step 3: Compute Annual or Monthly Revenue

With the contract duration established, calculate revenue:

  • Divide the total contract value by the total duration to obtain the annual or monthly revenue.
  • For contracts that begin partway through the year, calculate the proportion of revenue to recognize in the initial year based on the number of months active.

Example Formula for Annual Revenue Recognition

You can create a custom formula in HubSpot to determine annual revenue recognition:

(Total Contract Value) / DATEDIFF('End Date', 'Start Date', 'months') * DATEDIFF('31/12/CurrentYear', 'Start Date', 'months')

Setting Up Calculated Properties

To automate key calculations such as revenue recognition and project time tracking, you can set up calculated properties in HubSpot.

Step-by-Step Guide to Create a Calculated Property

  1. Navigate to Properties: Access your HubSpot account settings, then locate the Properties section.
  2. Create a New Property: Start the process to create a new custom property and select 'Formula' as the property type.
  3. Input Your Formula: Enter the formula relevant to your needs, using the provided example as a guide.

Managing Time Spent in Deal Stages

In addition to revenue recognition, you can track the cumulative time spent in each deal stage by creating a formula property that calculates the duration based on the date the deal entered each stage.

Important Considerations

  • Handling Multiple Suppliers: When working with various suppliers, create itemized entries for each one, setting their unit price to zero. This approach helps maintain clarity without affecting invoicing.
  • Addressing Reporting Challenges: Ensure that all necessary input values are populated. Incomplete data can negatively impact the accuracy of your reports.

By following these comprehensive steps, users can enhance their financial reporting, improve project management efficiency, and automate the revenue recognition process within HubSpot. For additional support, consider visiting the HubSpot community or exploring the help documentation.