Why don't earned (recognized) and invoiced revenue match?

Earned (recognized) revenue measures the value of work and billable expenses you've completed; invoiced revenue is what you've actually billed. The two frequently differ — and that's by design.

Written By Lauri Eurén

Last updated 1 day ago

Because they measure two different things. Earned (recognized) revenue is the value of the work and billable expenses you have completed. Invoiced revenue is what you have actually billed — whatever you chose to put on the invoices. They frequently differ, and that's expected.

Earned (recognized) revenue

The value of what you've delivered, recognized by billing type. Like all revenue in Operating, it covers both billable work and billable expenses:

  • Time-and-materials: tracked hours × rate, plus the billed amount of each billable Expense.

  • Fixed-price: a share of the Budget, released by the chosen revenue recognition method (for example, evenly over time, or weighted by hours and rates) and split across billable work and billable expenses. See How revenue recognition works in Operating for the full set of methods.

  • Capped time-and-materials: the same as time-and-materials, but capped at the Budget — work and expenses beyond the cap earn zero. It does not auto-fill the Budget to 100%; only fixed-price methods do that.

Invoiced revenue

Invoiced revenue is whatever you actually put on your invoices — and you control that. Operating helps you build an invoice, but it doesn't lock the total to your earned revenue:

  • It pre-fills lines from billable Time entries and Expenses (time-and-materials and capped T&M) or from the Budget amount on the project's invoicing schedule (fixed-price) — not from individual Time entries for fixed-price.

  • You can leave work off an invoice. Excluded Time entries still count as earned revenue; they simply haven't been billed yet.

  • You can re-price or relabel any line. The change affects only the invoice, not the earned value of the underlying work.

  • You can add freeform lines that aren't tied to any Time entry, Expense, or Budget.

So an invoice can total more or less than what's been earned — in practice you can invoice the client almost anything.

So they diverge when

  • Work is completed but not yet invoiced, or deliberately left off the invoice — earned runs ahead of invoiced.

  • Invoice lines were re-priced, relabeled, or added as freeform amounts — invoiced moves away from the underlying work.

  • A fixed-price project is billed on a schedule that differs from when the work is recognized — for example, you invoice the budget upfront while the revenue is still being earned across the delivery.

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