IFRS 15 Revenue from Contracts with Customers sets out when and how much revenue to recognise. This guide explains its five-step model in plain English, with an example.
Published July 2026 · Updated July 2026
IFRS 15, Revenue from Contracts with Customers, is the international standard for revenue recognition. It answers two questions consistently across industries: when should revenue be recorded, and how much?
IFRS 15 works through five steps:
The point is to match revenue to when you actually deliver value, not simply when cash arrives. For businesses that bundle products and services, or deliver over time, this can change when revenue appears.
You sell software for £1,200 a year, with a one-off setup worth £200:
Most UK small companies use UK GAAP (FRS 102), which has similar revenue principles. IFRS 15 applies to companies reporting under IFRS.
A distinct promise in a contract, for example the setup and the ongoing service are separate obligations if the customer can benefit from each on its own.
Invoicing is about billing; IFRS 15 is about when you have earned the revenue, which can differ from when you invoice or get paid.
Source: IFRS Foundation ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.