Deferred Revenue

Definition

Cash collected for service not yet delivered — a liability that converts to revenue as delivery occurs.

Formula

Deferred revenue = Cash collected - Revenue recognized to date

Worked Example

$120k annual contract billed up front on June 1:

June:   billings $120,000, revenue $10,000
        deferred revenue balance = $110,000
July:   revenue $10,000, deferred balance $100,000 ...

Interpretation & Pitfalls

Rising deferred revenue with flat recognized revenue signals strong future bookings. If the company shut down, this balance would need refunding — that's why it's a liability.

In TupicFinance

Deferred balances accumulate from revenue events vs. billing records, feeding the bookings/billings/revenue bridge.