The Karpeo guide · Accounting
Revenue and turnover: definition, calculation and examples
Revenue measures the sales generated by your business over a period. It does not tell you how much profit you made or how much cash customers paid. This guide explains net sales, VAT, discounts and the timing of recognition, with examples you can use in a Swiss small business.
By Sarah Prieur · Swiss certified accountant
Key takeaways
- Revenue, sales and turnover often describe the top line of a business; net profit is a different figure.
- Net sales exclude sales reductions and, for a VAT-registered business, VAT collected on behalf of the authority.
- A loan or capital contribution is not revenue, even though it increases the bank balance.
- In accrual accounts, the period when revenue is earned matters, not just the invoice or payment date.
Revenue, turnover and sales
In everyday business English, revenue and turnover often refer to sales from ordinary activities. “Turnover” is particularly common in British English, while “revenue” is widely used internationally. In Swiss French, the corresponding term is chiffre d’affaires; in German, Umsatz.
In financial reporting, the exact definition and presentation matter. Interest income or a gain on selling equipment can affect total income without forming part of ordinary sales. A measure labelled “gross revenue” also needs clarification: does it include VAT, or does “gross” mean before discounts and returns?
Revenue is a useful measure of activity, but it does not establish profitability. A company can sell more and earn less if discounts, purchasing costs or staffing grow faster. Our guide to business profit follows the calculation from sales to net income.
What counts as revenue?
| Transaction | Ordinary sales revenue? | Reason |
|---|---|---|
| Consultant’s fee for completed client work | Generally yes | Payment for an ordinary service |
| Retailer’s sale of goods | Generally yes | Payment for goods sold in the normal activity |
| Bank loan received | No | Creates a liability, not sales |
| Owner’s capital contribution | No | Financing through equity |
| Interest on a bank deposit | Usually presented separately | Financial income rather than ordinary sales for many businesses |
| Sale of an old company machine | Normally not ordinary sales for a consultancy | An asset disposal has its own accounting treatment |
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The activity changes the answer. Selling a car is ordinary revenue for a car dealer, but disposing of a consultancy’s company car is a different transaction. Identify the economic substance before assigning an accounting code.
Bank receipts can also include deposits, loan repayments, VAT refunds and transfers between your own accounts. Adding every credit on a bank statement does not produce a reliable revenue figure.
How to calculate net revenue
For a straightforward sale: revenue = quantity sold × unit selling price. Add the sales for the period, then deduct relevant discounts, returns and credit notes to calculate net sales.
| Example | Calculation | CHF |
|---|---|---|
| Product A | 500 units × CHF 100 | 50,000 |
| Product B | 50 units × CHF 200 | 10,000 |
| Sales before reductions | 50,000 + 10,000 | 60,000 |
| Discounts and returns | Sales reductions | −3,000 |
| Net revenue excluding VAT | 60,000 − 3,000 | 57,000 |
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For a service business, use billable services rather than goods. A consultant billing 100 hours at CHF 150 generates CHF 15,000 before reductions and VAT. The total number of hours worked, including administration and sales activity, is not the number of hours invoiced.
Define the period consistently: a month, quarter or financial year. Comparing a twelve-month period with a shortened first financial year without adjustment can give a misleading growth rate.
Revenue excluding VAT
VAT collected from customers is normally a liability to the tax authority, not sales revenue for a VAT-registered business. In the example above, if all CHF 57,000 of net sales are taxable at 8.1%, VAT is CHF 4,617 and the total charged is CHF 61,617.
To recover revenue from a VAT-inclusive standard-rate amount, use amount including VAT ÷ 1.081. For example, CHF 10,810 ÷ 1.081 = CHF 10,000 of sales, with CHF 810 of VAT.
Do not deduct 8.1% from the inclusive total: the tax is calculated on the amount excluding VAT. Different supplies can also carry different rates. See our Swiss VAT rates guide before applying one percentage to all receipts.
A business that is not VAT-registered should not invent a VAT deduction from its selling price. First establish its status and the accounting treatment. “Net of VAT” and “net of commercial discounts” answer different questions.
Discounts, returns and unpaid invoices
Trade discounts, rebates and credit notes correcting sales normally reduce the corresponding revenue. Keep the link to the original sale and record the appropriate period and VAT correction.
An overdue invoice is not automatically a cancelled sale. Assess whether the receivable remains recoverable and whether an impairment or bad-debt entry is needed under the applicable accounting rules. A customer paying late and a customer receiving a refund are different situations.
Payment processing fees are normally a separate expense rather than a reduction of the underlying sale. If a customer pays CHF 100 and the processor transfers CHF 97 after fees, recording only CHF 97 as revenue can understate both sales and costs.
Review the presentation of unusual transactions and principal-versus-agent arrangements. Money collected for someone else is not necessarily your own revenue in full.
When should revenue be recognised?
Under accrual accounting, revenue belongs to the period in which it is earned under the applicable recognition rules. Work completed in December may need to be recognised in December even if the invoice is issued in January. A customer advance can create a liability until the corresponding performance is delivered.
Example: a company earns CHF 20,000 from completed services during the month but receives only CHF 12,000 by month-end. If the remaining CHF 8,000 is a valid receivable, revenue is CHF 20,000; cash received is CHF 12,000.
Some smaller Swiss businesses may keep simplified records under the statutory conditions. Do not confuse that possibility with the VAT choice between reporting on agreed consideration and received consideration. Financial reporting, simplified bookkeeping and VAT timing are separate matters that must be reconciled.
A good month-end process reviews unbilled work, customer advances, credit notes, returns and cut-off, alongside the sales ledger.
Growth and useful sales indicators
Revenue growth = (current-period revenue − prior-period revenue) ÷ prior-period revenue × 100. Growth from CHF 100,000 to CHF 120,000 is 20%. If the prior-period figure is zero, this percentage calculation is not meaningful.
Break growth down into price, volume and mix. More revenue following a price increase is different from selling more units. A business can also become more dependent on one large customer despite healthy headline growth.
- Follow revenue by product, service and customer group.
- Track gross margin alongside sales growth.
- Monitor customer concentration and recurring versus one-off sales.
- Compare billable capacity with the hours or units actually sold.
- Review payment delays so that growth does not overwhelm cash.
Swiss thresholds to keep separate
| Obligation | General threshold | Key distinction |
|---|---|---|
| Compulsory VAT registration | CHF 100,000 of relevant worldwide turnover | Assess the nature of supplies, exceptions and expected startup turnover. |
| Full accounting for sole proprietorships and partnerships | CHF 500,000 turnover in the preceding financial year | This accounting threshold is not the VAT threshold. |
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The VAT test generally concerns supplies that are not exempt without input tax credit. It is not simply the cash received into a Swiss bank account. Incorporated companies such as an LLC or corporation have accounting obligations regardless of the simplified-accounting threshold applicable to sole proprietorships and partnerships.
If you are preparing a launch, our guide to starting a Swiss business connects these tests with the other registrations.
Frequently asked questions
Is turnover the same as revenue?
Often, yes, when discussing ordinary sales. Confirm the precise definition in a report, because some income is presented outside ordinary revenue and “turnover” has other meanings in finance and HR.
Is revenue the same as profit?
No. Revenue measures sales. Profit is the result after the relevant expenses and other income items are taken into account.
Do unpaid invoices count as revenue?
Under accrual accounting, a valid sale can be revenue before payment. Its collectability and any impairment must then be assessed separately.
Does a bank loan increase revenue?
No. It increases cash and a liability. The business has received financing, not earned a sale.
Should revenue include VAT?
A VAT-registered business normally excludes VAT collected for the authority from revenue. A non-registered business should not deduct fictitious VAT from its selling price.
Why do my bank receipts differ from my sales?
Payment timing, loans, capital, transfers, advances, VAT and unpaid invoices can all create differences. Reconcile the bank to the accounts rather than using bank credits as a sales report.
Sources and further reading
About the author
Sarah Prieur
Sarah Prieur is a Swiss certified accountant, partner and head of operations at Karpeo. She advises SMEs, self-employed professionals and entrepreneurs on accounting, tax and VAT, and oversees engagement quality. Before joining Karpeo, she spent eight years in audit at PwC Switzerland, progressing to manager.
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