Deferred Revenue
Money received for products or services not yet delivered, recorded as a liability.
When customers pay upfront (e.g. annual subscriptions), the revenue is recognised over the period it’s earned, sitting as deferred revenue until then. It signals committed future revenue and is common in SaaS, but founders must manage the cash carefully.
Examples
An annual plan paid upfront is recognised monthly as deferred revenue unwinds. — Strong deferred revenue indicates committed customers.
How it relates to The Startup Foundry
Understanding revenue recognition keeps your financials accurate for investor scrutiny.