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Understanding Revenue Stream – Its Types and Functions

By September 5, 2022November 1st, 2022Articles, Articles - FOB
revenue stream

A revenue stream is the funds used in business-related matters by a company, these funds are used to develop the company’s business. Revenue streams come from various sources which are then channelled to the business. This includes all the constituent components of business operations and sources that can generate cash for the company.

By the principle adopted, the flow of the company can be adjusted to the scale of the business because it includes the components of all the constituents of business operations and the sources that provide the company’s cash income.

The Definition of Revenue Stream

What is revenue stream? The use of this term is broadly related to funds and companies, which are ultimately used in the development of the company or the business being managed.

It is the flow of funds from companies with known sources. It can come from production, investment to asset sales and others. This term is an activity of a series of transactions, repeated in order to obtain sustainable funds. All activities such as sales, production and investment run in stages.

Business is running continuously, so this term refers to transaction activities that occur not only once. Business transactions are carried out with the aim of getting profits for companies. The flow of funds into the company, or the business itself is known as revenue itself.

The Types of Revenue Stream

revenue stream

  • Transaction Revenues

This type is seen in its business model. Transaction revenues are activities carried out in obtaining a flow of funds by using a transaction system on a single payment by the customer. This type of transaction allows companies and business people to get funds directly from consumers if they have sold services or assets and services.

  • Recurring Revenues

As opposed to transaction revenues, it is stated that these transactions involve ongoing transactions. In addition, there is no single payment from the customer, for example, the company provides credit services for certain goods and the customer will rent out existing services and assets.

Examples of Revenue Stream’s Application in Business

  • Capital Investment in Other Assets

The first example of a revenue stream is from the process of making investments in other assets. As a capital owner, the company can invest in various asset lines as desired. Investments in other sectors are carried out, of course, to make profits.

  • Doing Asset Leasing

An example of an application other than capital investment in other assets is leasing assets owned by a company. Such as building leasing, when the company owns several buildings, and others such as excess operations. So that the goods for rent have an impact on increasing additional funds.

  • Selling Owned Goods or Assets

When items aren’t reused, the assets of the company can not only be rented out but they can also be sold. However sales are made for various reasons and only because of certain conditions, such as the company going bankrupt, so the company sells its assets to get additional funds.

  • Selling Service Usage To Consumers

Companies can also sell services offered by the company. Some of them have bloomed in Indonesia, such as online motorcycle taxi service providers and food delivery. This is an example of a type of revenue stream that forms the capital of customer service.

  • Opening a Branch or Partner

Opening a branch or looking for a partner is an example of implementing a cash flow income, as already owned by a company in a country. So a company can set up a business that is owned in a different country, the aim is to increase the existing flow of funds and develop the business.

Also read: Understanding Macroeconomics, Its Purpose, and Influence

Functions of Revenue

  • Shows How Businesses Make Money

The first function of a revenue stream is to show how to do business, earn money and make a profit. BMC revenue stream is another word for this first function, revenue stream business model canvas. The company leaders in this case can read the list of revenue with the nominal generated.

  • Getting Investors

The importance of understanding the concept of how to get funds to flow. This is certainly the main goal of the company in running a business, is to get investors. A good management is important for a business if not it is hard for the business to progress. The progress of the business makes the stimulus so that investors can invest additional capital.

  • Doing Business Safely

The flow of funds that are understood properly and well can pave the way for a safe, even sustainable business. Also, company managements should not randomly decide policies or determining attitudes. In addition, some of the examples above were also used to withdraw funds.

  • Can Be a Business Strategy

The concept of this flow of funds can be understood simply, but based on its very strategic function for good business. This condition is evidenced by the basic goal, the flow of funds is to get a source of funds so that the business can be sustainable. This is to anticipate any turmoil or problems in the business.

  • Making Business People Focus on What They Are Doing

Continuous flow of funds is important so that the company or business can be more focused on what to do. The goals and strategic directions are aimed at gaining business benefits to the company together. The function of this flow of funds is very useful, besides that it is very helpful for the running of the company.

  • Get Clear Turnover and Profit

It is to determine the steps and attitudes that will be addressed to get a sustainable flow of funds. Businesses can get clear funds, such as having investments in various buildings so that these buildings can be rented out with a clear goal of getting investors.

If you have extra service capabilities so as to provide service-based businesses that help consumers, you will understand correctly the term revenue stream. Revenue stream does not lead to one point, but various areas in a business.

Revenue streams lead to a wide variety of scopes, this is evidenced by the many examples of implementation, one of which is the conditions that must be considered for business people because they must be able to pay attention to the flow of funds so that the company’s operations aren’t disrupted.

Funds that come in and out of the business make a good system and help the manual writing process to make it easier to get financial reports. It also minimizes the appearance of errors in recording. Revenue streams will help in so many ways if businesses understand them correctly.

This is a brief explanation of the revenue stream. It is starting from the understanding, advantages, and examples that exist in one of the essential things in running a company and business. You can learn more about Revenue Stream by enrolling in Sampoerna University’s Faculty of Business.

Sampoerna University applies an international standard curriculum that teaches students not only to gain knowledge in theory but also in hands-on practice supported by internationally qualified teaching staff.

If you have some questions about Sampoerna University, please don’t hesitate to contact us or fill the form below and our team will respond your questions.

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