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Unearned Revenue: What it is and What it Means for Subscription Businesses

Stax

The concept of unearned revenue can easily trip up SaaS companies that offer subscription services and products on a recurring basis. Unlike when selling ordinary products, you cannot recognize the revenue earned from a subscription all at once. So, what differentiates ‘earned’ versus ‘unearned revenue’? Advance rent payments.

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What Is Unearned Revenue and How to Account for It

Baremetrics

You can often find yourself receiving money long before you provide agreed upon services or, conversely, providing services and then waiting for payment. This puts you in the position of having “unearned revenue”. Sign up for the Baremetrics free trial , and start monitoring your subscription revenue accurately and easily.

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The SaaS Financial Model You’ll Actually Update (Updated 2019)

Baremetrics

This model allowed me to work with dozens of SaaS startups using spreadsheets, while we built our financial modeling software Flightpath. These are exports from your accounting, billing and other systems to bring in actual data to use in your models. You can also enter these manually, or use an export from your billing system.

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SaaS Balance Sheet Examples

Baremetrics

Accounts Receivable: This is one of two items that only appear on the balance sheet under the accrual accounting system and not the cash accounting system. Accounts receivable includes the revenue that your company has recognized but not yet collected. For a SaaS business, the deferred revenue category is particularly important.

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What Is Accrual Accounting?

Baremetrics

In cash accounting, you record all revenue and expenses when the cash enters and exits your checking account, respectively. This system is often preferred by smaller companies because it requires less expertise to implement. The company might have to pay taxes on revenue earned but not yet received. It can be tax advantageous.

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Matching and Revenue Recognition Principles

Baremetrics

Baremetrics integrates directly with your payment gateways, so information about your customers is automatically shown on the Baremetrics dashboards. You should sign up for the Baremetrics free trial , and start monitoring your subscription revenue accurately and easily. They are defined in U.S.

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Earned and Incurred Accounting: What’s the difference?

Baremetrics

Baremetrics integrates seamlessly with your payment gateways, so information about your customers is automatically visualized on the Baremetrics dashboards. You should sign up for the Baremetrics free trial , and start monitoring your subscription revenue accurately and easily. Try Baremetrics Free.