Software subscriptions are essential for every SaaS business. At the same time, many SaaS companies record their most important revenue stream incorrectly. This type of revenue is a subscription revenue and has a corresponding deferred revenue balance. Deferred revenue is a payment your company receives from a customer for future goods or services. Therefore, the company should also record this payment as a liability because it has not yet been earned. Deferred revenue in accrual accounting is recognized in the financial accounting according to the matching principle. SaaS revenue recognition and deferred revenue are important to implement for several important reasons. First of all, it is difficult for SaaS companies to assess financial performance using the receipts for one reporting period. In January, you may have $100 000 income for 1-year subscriptions. In February, you can earn only $10 000. Also, it is impossible to see how your recurring revenue is growing. To calculate your SaaS company's gross margin and recurring gross margin properly, you need to perform deferred revenue calculations. And without gross margins, it's hard to steer your business's financial performance or assess the impact of new bookings or new headcount. That is why this Deferred revenue calculator for the SaaS business is an essential financial planning tool.
SaaS Deferred Revenue Calculator
Calculate deferred revenue calculator for your SaaS business
Obtain SaaS company's gross profit margins easily
Assess the financial performance of your SaaS company
Use this deferred revenue calculator to calculate specific SaaS metrics such as customer lifetime value (CLV) or CAC payback period.
