If you’re starting a business, it’s crucial you understand sales revenue, the formula and how to use it. Your sales revenue will be a critical part of your business model, business financials and cashflow.
Some people confuse the difference between sales revenue and revenue income, and inaccurately use the terms ‘sales’ and ‘revenue’ interchangeably. Although they are similar, there is a subtle difference here that’s important to understand. While sales might be considered revenue, not all revenue has to be derived from sales. But what is revenue income?
Below is an explanation on the difference between revenue and income.
Understanding sales revenue
Sales revenue is the total income generated by the sale of goods and or services related to a given company’s operation. It’s often referred to as the ‘top line’ because, in accounting, it sits at the top of the income statement.
Therefore, it’s the total amount of income generated by sales to the company before any expenses or costs are subtracted from the calculation.
Revenue vs income
As mentioned, sales revenue only takes into account the total revenue income generated by sales of goods or services. Companies may generate revenue income in other ways. Therefore, the difference between revenue and income is:
Sales Revenue = proceeds from selling goods or services
Revenue Income= sales revenue + supplementary income sources
For more read our complete article: Revenue vs Income
Supplementary income sources
Companies can generate revenue income from selling their goods or services, but many get revenue income from other sources and this must also be accounted for.
Here are some revenue income examples. Many oil and gas companies frequently generate revenue from the sale of assets such as machinery.
However, there are other forms of supplementary income sources, or non-operating revenue. These include donations, interest, royalties, fees and money gained through litigation.
To conclude, sales revenue is not to be confused with revenue income. But what is revenue income? Revenue income is the total amount of income coming into the business over a period of time (monthly, quarterly).
Sales revenue is a subsection of revenue, which is simply the revenue generated from the sales of goods and service provided by the company.Sign up in minutes
About the Author
Wear My Freedom was founded by Alexandra Pluthero and is on a mission to become the world’s most comfortable D+ underwear company. In 2020, it launched its debut Freedom Bra®, a supportive, wire-free bra, specifically designed for D+ cup sizes. Providing genuine support and lift, the Freedom Bra® offers a revolutionary new option for those seeking larger cup sizes. Alexandra and Wear My Freedom don’t just have a focus on comfort, but are passionate about modernising the lingerie industry, and supporting women where it matters, through bras, body positivity and their bra donation service.