What is SaaS Revenue Recognition? 

Glad it was helpful!

I believe any setup fee is recognized as immediate revenue and deferred for a minimum of 36 months or higher if a contract is more than 36 and released to actual after the term ends.

Yes, please contact me here. www.thesaascfo.com/contact/

Can you tell me more?

This was helpful as I work thru my Workday activities.

When you post the invoice, the CR side of the entry must go somewhere. Unless you are charging their credit card, you'll have an AR balance.

@@TheSaaSCFO From accounting definitions, A/R may only be recognized once the service is delivered. Why not just debit the cash account instead? Cash would be debited and deferred revenue credited.

@@Leo-s7q4h You may be confusing that with the revenue side. Revenue cannot be recognized immediately if you invoice a 12K annual subscription.

@@TheSaaSCFO Correct, in this example our deferred revenue increases by $12,000. Revenue isn't recognized yet. Since the revenue isn't recognized yet why don't we debit our cash account - so we now have a debit to cash and credit to Deferred Revenue. From my understanding A/R increases once the revenue has been earned, and if we're not recognizing our revenue why not debit cash?

@@Leo-s7q4h I have not heard of that!

Hi Samuel, great question. If you invoice the customer for the full 36K that covers three years, then yes, you would book the full amount to deferred. I have typically invoiced annually which would only book 12K to deferred revenue.

@@TheSaaSCFO Thank you!

you are not right I am afraid. If you issued an invoice to your customer for 1st year, and it is 36 mons contract, then only 12k will be booked as Deferred Rev. as you will receive cash only for 1st 12 mons

@@toml8227 hi, what if the contract is non-cancellable?

@@geraklitus then 2nd invoice will be issued as per billing schedule, and another 12k will be booked on deferred rev.as a libility.

@@toml8227 thanks, I haven't thought carefully about the opposite entry! Total contractual 36k must not be sitting in AR but a yearly portion of 12k unless a customer prepays 36k. In reality, I guess, nobody would pay three years in advance anyway.