Revenue recognition for HR tech

Revenue recognition for PEPM contracts: fixed minimums, variable headcount, one schedule

How HR and workforce software companies recognise revenue in Bunny under ASC 606 / IFRS 15 when contracts combine a committed minimum recognised ratably with per-employee charges that vary monthly — with schedules generated from billing data and synced to the ledger.

Get a demo Start free

What makes revenue recognition different for HR and workforce software

Payroll, benefits, people-ops and workforce platforms priced per employee per month, where headcount moves every month and the price has to follow it.

  • Fixed and variable consideration in one contract

    The committed minimum is fixed for the term; the per-employee overage is variable each month. ASC 606 treats them differently and the schedule has to reflect both.

  • Amendments change the fixed part

    A mid-year increase to the minimum or a module added in March changes the remaining ratable schedule. Spreadsheets handle this once; not for hundreds of customers.

  • Annual prepayment, monthly recognition

    Customers who prepay the annual minimum create deferred revenue that unwinds monthly, alongside variable charges billed in arrears.

  • The books need entries, not exports

    Deferred revenue, recognised revenue and variable charges have to land in the ledger as journal entries per period.

How Bunny handles revenue recognition for HR and workforce software

  1. 01

    Ratable recognition of committed charges

    The committed minimum on the subscription is recognised ratably across the term; the schedule is generated when the quote is accepted.

    Revenue recognition
  2. 02

    Variable charges recognised when billed

    Per-employee overage billed in arrears is recognised in the period it is rated and invoiced, alongside the ratable minimum.

    ASC 606
  3. 03

    Schedules recalculated on amendment

    Raising the minimum, adding a module or changing the rate amends the subscription and Bunny recalculates the remaining schedule from that point.

    Revenue waterfall
  4. 04

    Deferred revenue on prepayments

    Annual prepayments are deferred and recognised on the schedule; bookings, billings and revenue are reported from the same subscription data.

    Deferred revenue
  5. 05

    Journal entries to QuickBooks and Xero

    Bunny imports the chart of accounts and pushes journal entries for invoices, payments, deferred and recognised revenue.

    QuickBooks integration
  6. 06

    Included with Advanced Billing

    Revenue recognition is part of the Advanced Billing add-on with multi-entity and multi-currency, running on the billing data rather than as a separate product.

    How it is priced

Variable consideration without a variable process

PEPM contracts are a textbook case of fixed plus variable consideration. The accounting is well understood; the operational problem is that the variable part changes every month for every customer, and any process that involves re-entering it is going to fall behind.

Because Bunny bills the headcount and holds the contract, the revenue schedule can be derived rather than maintained: the minimum ratably, the overage as billed, amendments recalculated at the point they happen. The billing page covers how the headcount gets in; this is what happens to it afterwards.

Revenue recognition for other industries

The same workflow, written up for other kinds of B2B SaaS. Browse all industries.

Free trial

The RevOps expert your team never had.

Bunny's AI agent knows your entire book of business and acts on it — flagging at-risk renewals, chasing overdue invoices, and closing upgrades automatically.
  • Type "send upgrade quotes to all starter plan accounts" — done in seconds
  • At-risk renewals flagged, chased, and closed — before you know there's a problem
  • Overdue invoices collected automatically, without an awkward conversation
Try free for 30 days

No credit card required. Cancel anytime.

FAQ

Frequently asked questions

How does Bunny recognise a PEPM contract with a minimum and overage?
The committed minimum is recognised ratably over the contract term. The per-employee charges above it are recognised in the period they are billed. Both come from the same subscription and appear on one schedule.
What happens to the schedule if the minimum is raised mid-year?
The amendment updates the subscription and Bunny recalculates the remaining ratable schedule from the amendment date, so deferred revenue and the waterfall reflect the new minimum.
Can we sync recognised and deferred revenue to our ledger?
Yes. Bunny integrates with QuickBooks Online and Xero, pushing journal entries for invoices, payments, deferred revenue and recognised revenue each period.
Is revenue recognition a separate product?
No. It is included in the Advanced Billing add-on at 0.2% of revenue, alongside multiple entities and currencies, and runs on the same subscription data that produces invoices.