Revenue (also called sales, income or turnover) is the total amount earned from selling goods or services before any expenses are deducted. It is the top line of the P&L.
Revenue is the total income your business generates from its primary activities - selling products, providing services or both. It appears at the top of the profit and loss statement and is sometimes called the 'top line' (as opposed to net profit, the 'bottom line'). Revenue should be recognised when earned (under accrual accounting), which typically means when goods are delivered or services are performed, regardless of when payment is received. Revenue can be categorised by source (product sales, service fees, subscription income, etc.), by customer segment, by geographic region or by business unit. Understanding your revenue mix helps with strategic planning and risk management. Revenue growth is important but must be evaluated alongside profitability - growing revenue while margins decline is a warning sign. SortBooks accurately tracks and categorises all revenue sources in Xero, providing real-time visibility into revenue trends, customer concentration and revenue mix.
SortBooks automates the bookkeeping processes related to revenue by connecting to your Xero account and using AI to categorise transactions, reconcile bank feeds and generate accurate reports. Instead of manually managing revenue, SortBooks handles it automatically with 97%+ accuracy - saving you hours every week and ensuring your books are always up to date and compliant.
The P&L (also called the income statement) shows your business revenue, expenses and resulting profit or loss over a specific period.
Gross profit is your revenue minus the cost of goods sold (COGS). It shows how much money remains from sales after covering direct production or purchasing costs.
Revenue recognition determines when and how revenue is recorded in your financial statements. Under accrual accounting, revenue is recognised when earned, not necessarily when cash is received.
Accounts receivable (AR) is the money owed to your business by customers who have purchased goods or services on credit. It is a current asset on your balance sheet.
Net profit (also called net income or the bottom line) is your total revenue minus all expenses, including COGS, operating expenses, interest and tax. It is the final profit figure.
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