Skip to content
Book a demo
Back to glossary

Revenue accounting

Bookings, billings and revenue

Three different numbers that are routinely confused: what was contracted, what was invoiced, and what has been earned.

These three describe the same contract at three different moments, and mixing them up is the most common reporting error in a subscription business.

Bookings is the total contracted value at signature. A three-year deal at $100k a year is $300k of bookings today.

Billings is what you invoiced. If that deal is billed annually in advance, billings this month are $100k.

Revenue is what you have earned. After one month of service you have earned roughly $8.3k; the rest sits in deferred revenue until you deliver it.

None of the three equals ARR, which is the annualised run rate of the recurring portion. A press release quoting one and a board pack quoting another is how a business ends up arguing about whether it grew.

Related terms

  • Deferred revenue Money received for service not yet delivered. A liability, not revenue, until it is earned.
  • Revenue recognition Determining when revenue is earned rather than when it was invoiced or paid.
  • ARR (Annual Recurring Revenue) The annualised value of your recurring subscriptions, normally MRR multiplied by twelve, used as the headline size of a subscription business.