Revenue recognition in Accounting depends on your accounting method, business model setup, and any manual adjustments. This includes changes to the accommodation fare in a reservation, PMC commission adjustments, or reservation modifications made through a booking channel.
The "recognition date" determines when a transaction appears in Accounting and on the owner statement. The original service item in a reservation might be recognized in one month, while a transaction for a change to that same reservation appears the following month.
Cash vs. accrual accounting methods
The timing of revenue recognition depends on your accounting method:
Cash basis: Revenue is recognized on whichever date is later between the business model setup (such as check-in) and the guest payment.
Accrual basis: Revenue is recognized based on your business model setup, as explained below.
Business model setup
When creating a business model, you select revenue recognition parameters for the PMC commission, recurring owner expenses or charges, and additional fees. These parameters define the date a transaction is recognized in your accounting, regardless of when you receive the guest payment.
Recognition options include:
Check-in: The transaction is recognized upon check-in, even if the guest pays before the check-in date.
Check-out: The transaction is recognized upon check-out, even if the guest pays before the check-out date.
Nightly: The transaction is recognized nightly, with a journal entry created for each night separately. For example, if a reservation runs from May 25 until June 5, the transaction is recognized for each night even though they occur in two different months.
Note:
For the guest folio tax per line item breakdown, currently in pilot, revenue is recognized differently for flat fee taxes and percentage taxes applied to specific line items. Learn more.
Adjusting guest folios in Guesty
You can add line items or make adjustments in the guest folio and change the realization date, as long as the accounting period isn't locked. This adjustment might appear in a different month than the original service item.
Example
A reservation checks in on June 27 and checks out on July 5. The business model recognition date is set to check-out.
On July 7, you determine the guest deserves a refund and adjust the accommodation fare by -$50. The realization date you select when making this adjustment determines when the transaction posts to the accounting folio and owner statement:
To show the adjustment in June: Select June 27 (check-in date) as the realization date.
To show the adjustment in July: Select a date in July as the realization date.
Adjusting PMC commissions in Guesty
If a specific reservation requires a PMC commission percentage that differs from your business model, you can adjust the amount in the reservation. This change increases or decreases the owner's revenue. If you charge the owner VAT for the commission, the system adjusts that as well.
The recognition date for these adjustments can't be changed. The system recognizes the adjustment on the date you make it, rather than following the business model logic. This means the adjustment might appear in a different month than the reservation.
Processing channel adjustments
When a booking channel changes a reservation, the recognition date for the adjusted line item depends on your business model logic and whether the accounting period is locked.
Changes to the accommodation fare
Business model line item recognition date |
Locking period status |
Recognition date |
|---|---|---|
| Check-in | not locked | Check-in date |
| Check-in | locked | Date the adjustment is made |
| Check-out | not locked | Check-out date |
| Check-out | locked | Date the adjustment is made |
Change to a fee
Fee calculation rule |
Check-in date |
Recognition date |
|---|---|---|
| Nightly | In the future | Check-in date |
| Nightly | In the past | Date the adjustment is made |
Recognition examples
No locking period
A reservation checks in June 27 and checks out July 5. The business model recognition date is check-out, and the accounting period isn't locked. A change is made via the booking channel on July 4.
Recognition date: July 5. The adjustment posts to the accounting folio in July.
Active locking period
A reservation checks in September 5 and checks out September 15. The business model recognition date is check-in. The accounting period locks monthly, meaning September transactions lock on October 10.
Adjustment made on September 20: The period isn't locked. The recognition date is September 5, and the adjustment posts in September.
Adjustment made on October 2: The period isn't locked. The recognition date is September 5, and the adjustment posts in September.
Adjustment made on October 15: The period is locked. The recognition date is October 15, and the adjustment posts in October.
Airbnb resolution center item
An "Airbnb resolution center" (ARC) line item in the guest folio represents a closed resolution from Airbnb. The recognition date for an ARC item reflects when it was sent to Guesty. This date might be later than when the actual refund or payment occurred.
