Bookings vs Revenue

Wed, 25 October 2017 - Scott Orn

Video: What is the Difference Between Your Startup’s Bookings and Revenue?

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.

Kruze Consulting is a leading CPA firm only serving funded startups. If you are a funded startup, choose Kruze Consulting’s team of CPAs, bookkeepers, CFOs, former IRS tax auditors, and venture experts. The firm handles all things Accounting, Tax, Finance, & HR: interim CFO Consulting, financial modeling, annual taxes, R&D tax credit studies, venture debt consulting, 409A reporting, bookkeeping, AR/AP, and Seed/Series A/B Fundraising Preparation. Contact Kruze today!

 

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