For a huge number of businesses, Stripe is the go-to solution for billing and payment needs. Stripe’s reputation makes it an obvious choice for leadership teams from a marketing standpoint and the ease of implementation makes in-house developers and IT teams love it. However, for accounting and finance teams it falls down at the last leg which is accounting for the data from it and analyzing it. 

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Stripe without Revenue Recognition Solution

To compile all necessary data for accurate accounting, up to eight reports need to be downloaded from Stripe if you don’t use the Revenue Recognition:

1. Invoices Report: Available on the Invoices page.
2. Cash/Payments Report: Found under the “Payments” tab in “All Transactions.”
3. Payout Reconciliation Report: Located in the “Reports” tab.
4. Refunds, Disputes, and Credit Reports: Extracted from the Activity Report, filtered for specific categories:some text
   • Refunds: Filter for refunds.
   • Disputes: Filter for disputes.
   • Credits: Filter for credits.
5. Balance Report: Select the balance change from activity for the relevant date range.

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Stripe with Revenue Recognition Solution 

Stripe does recognize this and thus has started to build out a Revenue Recognition Solution, though it is still very underbaked from an accounting standpoint. They are still looking for a product manager for the solution. It has 6 main drawbacks that relate to the accounting and analysis of the data.

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1. It only accounts for Stripe stuff. This is great if you use only Stripe. For most organizations, it is one of many revenue streams that need accounting, which makes this solution practically useless for overall revenue recognition accounting and analysis. You need something that can handle all of your revenue streams. 
2. Not ASC 606 Compliant - Stripe often applies revenue recognition rules incorrectly. Stand Alone Selling Price (SSP) Carve Outs, right of return, contract modifications over time - these concepts are all handled incorrectly from an ASC 606 standpoint. While it’s better likely more accurate than your manual process, you’re still going to be doing work to pass audits.
3. Inability to analyze -  The issues persist the more advanced your business model is: line-item level information, tiered pricing, or included quantity allocations are often hidden on the invoice, unsupported, or reduced to basic line-item modeling. This lack of detailed modeling on the invoice forces finance teams to manually process invoices using custom queries and external data to understand receivables. Product margin analysis is impossible with the standard reports provided.
4. Fee Opacity - Interestingly enough, Stripe makes it very hard for customers to do margin analysis with their fees to determine how much product margin is going to their fees. Sounds like a feature rather than a bug. 
5. Expensive - Stripe’s pricing scales not as a percentage of revenue but payment volume. For high-transaction, subscription businesses this means it doesn’t scale well. In addition, you’re paying fees for the initial transaction regardless of whether revenue rec rules have been applied correctly. You can get double charged even for straightforward scenarios such as returns, and you’re not getting that back. Stripe isn’t proactive about informing you of price hikes either. The list of people complaining about Stripe’s pricing structure is huge - just google “Stripe pricing” and see for yourself.
6. Crappy Support - Another huge con to using Stripe for revenue recognition is their lack of customer support. You cannot call Stripe. Their support page on their website has the phone call option and messaging grayed out. You can only email and get automated chat bot responses.

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Stripe’s features aren’t a fit even for some basic rev rec scenario

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Stripe often applies revenue recognition rules incorrectly. SSP, right of return, contract modifications over time - these concepts are a necessity for many industries, especially subscription businesses. The fact that Stripe is unable to handle them correctly from a revenue recognition aspect is baffling. 

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The issue persists the more advanced your business model is: line-item level information, tiered pricing, or included quantity allocations are often hidden on the invoice, unsupported, or reduced to basic line-item modeling. This lack of detailed modeling on the invoice forces finance teams to manually process invoices using custom queries and external data to understand receivables. And that takes a ton of time.

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Some other basic things such as cash balancing, fee transparency, or high churn and return rates struggle are an absolute nightmare to handle in Stripe. So even thought your IT team might have been happy with it due to its relative ease of implementation, now your finance and accounting have a much deeper, long-term issue to deal with.

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Stripe’s pricing is full of unexpected increases

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Stripe’s pricing scales not as a percentage of revenue but payment volume. For smaller businesses, this could be terrible news. High-transaction, subscription businesses also find this problematic.

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In addition, with Stripe, you’re paying fees for the initial transaction regardless of whether revenue rec rules have been applied correctly. You can get double charged even for straightforward scenarios such as returns, and you’re not getting that back. Stripe isn’t proactive about informing you of price hikes either. All of this contributes to one big mess. The list of people complaining about Stripe’s pricing structure is huge - just google “Stripe pricing” and see for yourself.

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Stripe support? Forget about it

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Another huge con to using Stripe for revenue recognition is their lack of customer support. You cannot call Stripe. Their support page on their website has the phone call option and messaging greyed out. You can only email and get automated chat bot responses. As one unhappy Stripe customer puts it: “If you email, you get robots. Even in the same email thread, a different "agent" (with a different name and everything) answers each time with not prior knowledge of your history. There are no ticket numbers to your support request; nothing tracking it. The robots respond with what is quite obviously a template response.”

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This is shocking from such a reputable company. In some Reddit threads, people have suggested writing to Stripe cofounder (peter@stripe.com) as that’s the only way to get someone to look at your problem. That sounds untenable to say the least.

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Stripe reporting is very manual and time-consuming

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Stripe’s reporting is challenging, even for manual calculations. That’s because it doesn’t expose enough of the underlying transaction data to understand what happened within an account month. Instead of focusing on analyzing reports of different segments and product lines, your accounting team will be stuck extracting and deciphering data manually.

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Without the needed granularity, obtaining transaction level-data is more about reconstructing what exactly happened. Dynamic segment/product reporting in real-time is utopia at this point. That creates confusion around understanding your company’s profitability, whether the business is doing good or not, and makes it harder to know what to focus on.

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So how do you accommodate for these deficiencies Stripe’s Revenue Recognition Solution?

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You can’t - not if you’re a growing company that deals with a lot of subscriptions, contract modifications over time, license additions and removals for your product, returns, etc. Revenue recognition will become exponentially more difficult in Stripe and future revenue streams unless you automate it through a different solution. In addition, revenue management and reporting and knowing what’s really going on will be even harder.

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HubiFi addresses all of these issues and is built to help you centralize, own, and automate your financial data using audited ASC 606 Compliant rules across your millions of transactions. It allows a single source of truth for financial analytics on clean, reconciled data. HubFi simplifies financial management with full audit trail, data lineage and drill down. It can also capture historical period changes & offers real-time dynamic financial reporting. 

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Correctly apply rev rec using audited ASC 606 rules

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HubiFi can help you easily manage millions of transactions with correctly applied revenue recognition rules that are compliant with ASC 606 and have been audited by accounting firms. Stop worrying about audit findings and internal control deficiencies around handling contract modifications, disputes, cancellations, etc. and start worrying about product margins. 

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Insufficient transaction level data

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HubiFi integrates and exports data from Stripe APIs and other operational sources and can walk transactions back to their origin at a more granular level than is available on the dashboard reports. This eliminates the issue of not having enough of the underlying transaction data to understand what happened within an accounting month for your finance function. 

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Pricing and flexibility

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HubiFi pricing scales as a percentage of revenue rather than payment volume. This keeps your accounting and finance function cost as a % of overall revenue on the P&L best in class. 

Anything beyond a very basic revenue recognition scenario and Stripe starts applying rules incorrectly. Its double charges, intransparent pricing and lack of support make you question your career choices. It eats away at your margin and never really solves your accounting challenges. This blog dives into why that’s the case and how you can find a better solution for managing your Stripe data and automating revenue recognition.

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Take the first step to analyzing your revenue recognition processes and schedule a free conversation with the founder of HubiFi here.

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