What is SaaS Revenue Recognition?
Learn the basics of SaaS revenue recognition and deferred revenue. For SaaS companies, it is extremely important to have implement the proper accounting for your subscription revenue.
I walk you through basic examples of revenue recognition so that you can understand the process.
Thank you for the clear walkthrough!
Glad it was helpful!
Superb !
Very good quick session. Can you have a session on SaaS cost accounting guidance
Can you tell me more?
Hi, continue with Samuel’s comment. The new standard requires to recognize revenue from contracts and since the contractual amount is 36k, this is what should go to contract liability, I suppose, irrespectivly of the actual invoiced amount. Thank you for the video.
@Tom L thanks, I haven’t thought carefully about the opposite entry! Total contractual 36k must not be sitting in AR but a yearly portion of 12k unless a customer prepays 36k. In reality, I guess, nobody would pay three years in advance anyway.
@geraklitus then 2nd invoice will be issued as per billing schedule, and another 12k will be booked on deferred rev.as a libility.
@Tom L hi, what if the contract is non-cancellable?
you are not right I am afraid. If you issued an invoice to your customer for 1st year, and it is 36 mons contract, then only 12k will be booked as Deferred Rev. as you will receive cash only for 1st 12 mons
Hi, why would you not book the full 36k to deferred revenue when the contract is signed?
@The SaaS CFO Thank you!
Hi Samuel, great question. If you invoice the customer for the full 36K that covers three years, then yes, you would book the full amount to deferred. I have typically invoiced annually which would only book 12K to deferred revenue.