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Financial Ledgers

In the realm of marketplace commerce, financial transactions are far from straightforward. The interplay among multiple parties, each generating revenue, introduces a level of complexity that requires meticulous accounting. Sellers expect timely and accurate payouts, and marketplaces are responsible for the intricate accounting of how revenue is recognized, accrued for sellers, and how much they retain as commission.

That's why we built a new ledger-based financial accounting system, to record an auditable trail of every transaction relating to an order and manage how and when revenue is recognized and split between the marketplace and its sellers. The result is a more flexible payout system in line with ASC 606 revenue recognition standards.

Revenue accrual mode

The new ledger system introduces a key setting called "Revenue Accrual Mode", which gives marketplace operators the flexibility to determine when revenue is recognized and accrued for seller payouts. This capability allows for tailored revenue recognition timing that aligns with the marketplace's operational needs.

• Fulfillment: This is the standard approach where revenue is recognized as each order line is fulfilled. This method supports scenarios where marketplaces distribute partial payouts for partially fulfilled orders.

• Order placed: This option allows for the recognition of revenue and the disbursement of funds to sellers as soon as an order is placed. This is particularly beneficial in situations where vendors need upfront funds to procure materials for made-to-order items, enabling them to start production immediately.

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