Membership Revenue Recognition

Documentation Index

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If you’ve read the Cash vs. Accrual Accounting guide, you already know the basics: cash counts a sale when money changes hands; accrual counts it as the patient receives what they paid for. Memberships are where that gap is widest — patients pay for a month of benefits up front, but they receive those benefits day by day or visit by visit across the cycle. This guide is for clinic owners and accounting staff who want their accrual reports to reflect what each membership actually delivers. Pick the right setup once, and the numbers in Accounting Overview match what’s really happening.

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Two questions per membership

Each membership product carries two settings that together decide how its cycle revenue gets recognized:

1. What members get at renewal — the mechanic. When a member’s monthly billing runs, what does the clinic owe them in return?
2. When the revenue gets counted — the recognition. As benefits are used? Spread over the cycle? At the moment of billing?

Different memberships answer these differently. A “4 facials per month” plan, a “$200 monthly credit toward anything” plan, and a flat “VIP access” subscription each call for a different combination.

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What members get at renewal

The pattern: pick Service credits when the membership specifies which services; pick Account credit when the membership specifies how much spend; pick None when there’s nothing the clinic owes the patient on the platform.

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When the revenue gets counted

Not every combination is meaningful. The next section shows which pairings make sense.

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Valid combinations

A few notes on the table:

• Per redemption requires service credits to track against — there’s no per-redemption stream for the other mechanics.
• As credit is spent only applies to account-credit plans — it follows the actual spend.
• At renewal counts the whole cycle immediately. It’s the simplest option but only matches the accounting principle of “recognize as delivered” when there’s nothing further to deliver. Use it cautiously for service-credit and account-credit plans; the cycle billing still represents future services the clinic owes.

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Worked examples

The four most common setups, walked through one cycle.

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Service credits, per redemption

Plan: $119/month, 4 facials included. Patient uses 3. Total counted across the cycle: $89.25. The remaining $29.75 stays in deferred revenue until the unused entitlement expires.

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Service credits, spread over the cycle

Plan: $250/month, unlimited 10% off everything (or “up to 100 services” — a cap that’s there for safety, not what members actually use). 30-day cycle. Total counted across the cycle: $250, smoothly distributed. Why this is the right choice for unlimited / high-cap plans: a “4 facials” plan can run out — the clinic’s obligation is bounded by how many entitlements it’s selling. An unlimited discount plan can’t run out — the clinic owes the discount for every day of the cycle. The right way to count revenue is to follow time, not redemption events.

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Account credit, as credit is spent

Plan: $250/month, member gets $250 in account credit to spend on anything. Member spends $200 on a facial mid-cycle, with the remaining $50 unspent. The membership program “earned” $200 this cycle through the spent credit; the unspent $50 will recognize when it’s used. This is the cleanest accrual treatment because the clinic only counts revenue as services are actually delivered.

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None, at renewal

Plan: $50/month flat clinic membership. No included services, no credit. Members just get access (priority booking, member-only events, status). No deferral, no per-visit math. This is the simplest setup and the right shape when there’s no service obligation behind the fee.

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How refunds behave

Refunds reverse only what was actually counted as revenue. The mode determines the shape of the reversal: Across all four modes, the principle is the same: recognized revenue follows delivered value, and refunds reverse only what’s been recognized — never beyond it. Cash collected and recognized revenue won’t always match at cycle end, though: unused entitlements (Per redemption) and unspent credit (As credit is spent) stay as deferred revenue, and partial cycle refunds under Per redemption are a current exception that can leave recognition out of step with cash. Those gaps appear in Deferred Revenue on Accounting Overview.

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Picking the right setup

A short checklist for setting up (or auditing) a membership product:

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Common questions

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Why does my membership show zero revenue on the Accrual basis even though I’ve billed cycles?

If the membership grants service credits but no one is redeeming them yet, Per redemption counts $0 until redemptions start. The cycle revenue is sitting in Deferred Revenue on Accounting Overview. Switching the product to Spread over the cycle will recognize the cycle revenue on the clock instead, which is the right choice if the plan delivers ongoing benefits regardless of redemptions.

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What happens to revenue when I change a membership’s recognition mode?

Changes only affect future cycles. Existing cycles keep the recognition they were created with — past months in Accounting Overview don’t shift. This is intentional: your historical reports stay stable across configuration changes.

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My membership grants both a credit and a discount. Which mode wins?

Memberships with multiple kinds of benefit currently use a single mode for the whole cycle, so pick the mode that best reflects the dominant benefit. If you have a plan with truly mixed entitlements that need different recognition shapes, contact support — splitting recognition across entitlements is on the roadmap.

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How do I migrate existing memberships to a new recognition mode?

Decoda runs migrations one tenant at a time. Contact support to schedule a product audit: we’ll review every membership’s actual usage data, recommend a benefit-mechanic + recognition-mode pair per product, and apply the change for future cycles only.

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Is At renewal safe to use?

At renewal matches what cash-basis reporting does for the membership — every dollar billed is counted on the day of billing, no deferral. It’s accurate for products with no real obligation behind the cycle (flat subscriptions, signup fees). It is not the standard accounting treatment for cycles that include services or credits — those should defer until delivered. If you only use the Accounting Overview for internal operations and not for external reporting, At renewal can be a reasonable simplification; otherwise prefer one of the deferred modes.