At Kruze Consulting, we get tons of questions about the difference between bookings and revenue.
In the software as a service world, bookings are the culmination of all the contractual payments you’re gonna get, usually over the next 12 months. So, if you close a $1.2 million contract, over the next 12 months you recognize that as bookings.
Now, revenue, that is a backward-looking metric and revenue you recognize over the length of the service period. So, if you close that same $1.2 million contract over 12 months, each month going forward you’re gonna recognize $100,000.
That’s the difference between bookings and revenue. The board, the CEO, and the sales team love bookings. That’s a forward-looking metric, and the accountants, like us, love revenue.
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