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Booking Revenue

Many software companies use accounting rules or practices which require a contract to be signed prior to being able to book revenue into the supplier’s accounts.

Whilst it is beyond the scope of this section to provide detailed accounting advice, there are many contractual issues that affect an accountant’s view of whether it is possible to book the entire licence fee (for perpetual licence, for which there is a one-time payment) on the date of signature of the contract. These factors include:

Whether there is a contract signed by both parties.
Whether delivery has taken place.
Whether payment is subject to any contingencies and is payable within a defined period.
Whether there are any non-standard warranty or acceptance provisions.
Whether support and maintenance is provided from the date of signature of the contract.
Whether there are any unusual obligations in either the software licence or the support services.
Whether there are any future obligations to provide products or services, including new releases or additional functionality.

Our experience is that relatively small and often innocuous-looking changes to the contract can have a fundamental effect on the accountant’s view of the timing of booking revenue. Specific accounting and legal advice should always be sought.

Next: the Risks of not having a Software Licence.

Legal Protection for Software Licence Rights & Pricing Booking Revenue Risks of not having a Licence Key commercial issues Tips to make money

Master Perpetual Software Licence & Support Agreement Master Periodic Software Licence & Support Agreement Master Support Agreement Trial Licence

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Which contract is best for me?

Clicking on the link to one of the specific online Contract Templates listed on this page will give you a description of when that particular contract should be used, and help you decide if it is the right document for your needs.

You should choose the online Contract Template that most closely describes the way you provide your software licences and support to the customer.