Deferred Revenue and its Impact on your Small Business

Posted by ronika under Finance
From http://www.montrealfinancial.ca 4726 days ago

At first glance the calculation of total sales/revenues seems fairly straightforward. Add up your total sales (or ideally have your accounting software do it for you) and voila – you have your gross sales. There are, however, several types of adjustments that need to be made depending on the nature of the sale, including any amounts that might be construed as deferred revenues. Essentially (and quite simply) deferred revenues represent sales that are invoiced their customers now for goods or services to be provided at a later date.

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Comments

Written by ronika
4726 days ago

My pleasure, Heather. It is an important consideration for business owners who have received cash up front, but have not really performed the service (or provided the product). Thanks for the post idea - I will start thinking about it...

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Written by HeatherStone
4726 days ago

Ronika,

Thanks so much for posting on this topic and sharing it with the BizSugar community. It's doubtless an issue that comes up perhaps with consultants and possibly with a whole variety of service provider businesses. Another important aspect of calculating revenue that might be worth a whole post of its own is how to deal with unpaid invoices or clients who have not paid invoices yet but may be on a payment plan that could stretch several tax periods or even into the next fiscal year.

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