Login

Lost your password?
Don't have an account? Sign Up

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.

https://www.saas.place

13 comments

  1. geraklitus

    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.

    1. geraklitus

      @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.

    2. Tom L

      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

    1. The SaaS CFO

      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.

Leave a Comment

Your email address will not be published.

*
*