Startup Q&A
What's the Difference Between Bookings & Revenue for Startups?
CEO and Founder of Kruze Consulting
Table of contents
Bookings is a Salesperson’s term and Revenue is an Accountant’s term.
Bookings = Total Amount of Contracts or Deals. Sometimes Bookings is defined as what will be invoiced over the first year of a deal. This is a Sales Person’s barometer and the Board loves focusing on these numbers because it means the company is closing big deals and has momentum. Bookings is a Leading Indicator for the business. The Board knows that eventually all those Bookings will eventually be recognized as Revenue.
Revenue = The amount of Revenue that corresponds to the services delivered in a specific month or period. This is how accountants think because you can’t recognize an entire deal in one month, or one quarter if the service will be provided over a longer time. So a 12 month deal will have the revenue recognized over 12 months. All the other invoiced amounts that are not recognized in a specific month, sit in Unearned Revenue, waiting to be recognized in the future. Revenue for SaaS companies is a trailing indicator, it reflects what you have done in the past.
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