When you can officially count the money — which isn't always when you receive it.
Revenue recognition is the accounting principle that determines when revenue is officially recorded on your financial statements. Under accrual accounting, revenue is recognized when it's earned — not necessarily when cash is received.
Revenue recognition is the reason your P&L and your bank account often tell different stories. A $120K annual contract paid upfront is $120K in cash today — but only $10K/month in recognized revenue over 12 months. Conversely, a $50K project completed this month might not generate cash for 60 days.
This disconnect between recognized revenue and actual cash is where many businesses get into trouble. They see revenue growing on the P&L and assume cash is healthy — until payroll bounces.
CentSight tracks both recognized revenue and actual cash flow, showing you the gap between the two. This dual view prevents the false confidence that comes from looking at revenue alone.