Deferred Revenue

Deferred revenue is a liability on a company’s balance sheet that represents a prepayment by customers for goods or services that have yet to be delivered. If your customers pay annually for services rendered monthly, then you have deferred revenue. You recognize it as earned revenue on the income statement as the good or services is delivered to the customer.

If you find yourself in a SaaS business or customers are paying you in advance for services rendered monthly, then you need to to focus on…

  • How to report deferred revenue
  • Revenue recognition practices
  • Understanding customer acquisition costs and lifetime value
  • Maintaining working papers to detail your deferred revenue

 

At GrowthLab...

We develop an understanding of your business model in order to create proper revenue recognition processes and procedures. We help you maintain working papers or applicable systems to track your deferred revenue. It is also important to understand the app-ecosystem in order to provide an end to end solution to your subscription based business. 

 

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