WELCOME TO ISSUE NO #069
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📆 Today’s Rundown
Hey {{first_name}} 👋, hope you had a great week! In the last issue, we discussed why tracking Revenue Backlog matters, and now we are moving with the first topic from Financial Metrics content.
Let’s talk about ⬇️
Accrued vs Deferred Revenue
Most SaaS founders think revenue is simple:
Invoice sent = revenue earned.
But after working with dozens of SaaS teams, I can tell you that assumption is quietly wrecking forecasts, cash planning, and board conversations.
In reality, you only need 2 revenue concepts to get this right:
Accrued (Unbilled) Revenue
Deferred (Unearned) Revenue
Let’s break them down — with real examples 👇
TL;DR
1️⃣ Accrued (Unbilled) Revenue
2️⃣ Deferred (Unearned) Revenue
3️⃣ Why SaaS Teams Confuse These (and Pay for It)
4️⃣ How Finance Teams Should Think About It
1️⃣ Accrued (Unbilled) Revenue
The goal of accrued revenue is to show what you’ve already earned, even if no invoice has been sent yet.
This matters most in:
SaaS with usage-based pricing
Services billed monthly in arrears
Long-term projects with milestone billing
What it really means:
You delivered value. The customer owes you. Cash just hasn’t arrived yet.
Example
A SaaS company delivers 2M ad impressions in January at $5 CPM.
Revenue earned: $10,000
Invoice sent: February
Cash received: Later
That $10,000 belongs in January as accrued revenue — otherwise January looks weaker than reality.
💡 Accrued revenue improves performance visibility — but not cash.
Need clarity on your financial strategy or cash flow optimization?
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2️⃣ Deferred (Unearned) Revenue
The goal of deferred revenue is to show what you’ve been paid for — but haven’t earned yet.
This is extremely common in SaaS:
Annual prepaid subscriptions
Multi-month upfront contracts
What it really means:
You have cash — but you still owe delivery.
Example
A customer pays $1,200 upfront for a 12-month subscription in January.
January revenue earned: $100
Deferred revenue: $1,100
Each month, $100 moves from deferred → earned revenue.
💡 Deferred revenue strengthens cash today — but doesn’t inflate revenue.
3️⃣ Why SaaS Teams Confuse These (and Pay for It)
Here’s what I see all the time:
Revenue recognized too late → performance looks weak
Revenue recognized too early → margins look fake
Forecasts built on cash instead of earned value
And suddenly:
ARR doesn’t reconcile
Cash runway feels “off”
Board questions get uncomfortable
Accrued and deferred revenue fix this by aligning delivery, revenue, and reality.
4️⃣ How Finance Teams Should Think About It
If you want clean numbers:
Accrued revenue → asset (value delivered, cash pending)
Deferred revenue → liability (cash received, work pending)
Neither is “good” or “bad.”
They’re signals.
And those signals power:
Better revenue forecasting
Cleaner month-end closes
More credible board reporting
If you want, reply with “ACCRUAL” and I’ll share:
A clean accrued/deferred revenue checklist I use with SaaS clients
Plus a simple sanity check you can run before every board meeting
Chat soon,
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Aleksandar Stojanovic
Chief Finance Ninja | Fiscallion
Fractional CFO & FP&A Boutique Consultancy
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