Appropriately Tracking Deferred Revenue?

[Steven Bialecki]

Are you getting paid before delivering products or services? That’s called deferred revenue, and it can significantly impact how you report income and liabilities. This quick guide breaks down what deferred revenue is, how it works, and how to record it properly—especially crucial for subscription services, insurance premiums, or any business collecting advance payments.

Key Takeaways:

Deferred revenue is recorded as a liability until you fulfill the service or deliver the product.

Once you deliver on your obligation, move the amount from deferred revenue to earned revenue on your income statement.

Proper tracking and recognition of deferred revenue helps ensure accurate financials and keeps you tax-ready.