Billing pulls cash forward, but revenue is earned ratably. Enter a contract and get the full ASC 606 straight-line recognition schedule - monthly recognised revenue, the deferred liability, and where it lands each month.
The full value billed for the contract.
The period over which the service is delivered.
Recognised immediately, not spread. Leave 0 if none.
Cosmetic label for the first row, e.g. "Jan 2026".
Month-by-month straight-line recognition. Cumulative recognised climbs as the deferred balance unwinds to zero at the end of the term.
| Month | Recognised this month | Cumulative recognised | Deferred balance |
|---|
collected upfront, before it is earned
recognised ratably as you deliver
billed but not yet earned
Deferred revenue is cash you have collected for a service you have not yet delivered. It is a liability, not income - you owe the customer the rest of the contract. As you deliver each month, a slice moves off the balance sheet and onto the income statement as recognised revenue.
ASC 606 in one line: recognise revenue as you satisfy the performance obligation - for an evenly delivered subscription, that means straight-line, an equal amount every month over the term.
Monthly = (value − one-off) / months Example: a $12,000 12-month contract, no setup fee:
An annual upfront deal lands a year of cash on day one, which is great for runway. But booking it all as revenue overstates the period and breaks revenue recognition. The deferred balance is the honest accounting of what you still owe.
For a clean subscription, monthly recognised revenue equals your MRR - the recurring slice you earn each month. One-off fees are not MRR because they do not recur, which is why this tool peels them out before spreading the rest straight-line.
Deferred revenue is cash you have collected but not yet earned. When a customer pays upfront for a 12-month contract, you have the money but you have only delivered a fraction of the service. The unearned portion sits on your balance sheet as a liability and is recognised as revenue month by month as you deliver. See deferred revenue.
Take the recognisable contract value (total contract value minus any one-off fee recognised immediately) and divide it by the contract length in months for straight-line recognition. Each month you recognise that fixed amount, your cumulative recognised revenue grows by it, and the deferred balance falls by it until it reaches zero at the end of the term.
ASC 606 says you recognise revenue as you satisfy a performance obligation. For a subscription where the service is delivered evenly over the contract, that means recognising an equal amount each period - straight-line. A $12,000 annual contract earns $1,000 of revenue per month, regardless of when the customer actually paid. See SaaS revenue recognition under ASC 606.
No, but they are closely related. For a clean monthly subscription delivered evenly, your monthly recognised revenue equals your MRR. Deferred revenue is the unearned liability sitting behind that - the future months you have already been paid for. Billings pull cash forward; MRR and recognised revenue describe what you have actually earned.
It depends on whether the fee is a distinct performance obligation. A setup fee that delivers standalone value can be recognised immediately; otherwise it is spread over the contract. This tool treats the one-off fee as recognised now and spreads the remaining contract value straight-line. One-off fees are never part of MRR because they do not recur.
Bookings are signed contract value, billings are what you have invoiced, and revenue is what you have earned and can recognise. A signed annual deal is a booking; invoicing it is a billing; recognising it $1,000 a month is revenue. Deferred revenue is the gap between what you have billed and what you have recognised. See bookings vs billings vs revenue.
Deferred revenue tells you how much earned revenue is locked in for future periods, which makes forecasting and revenue quality far more reliable than looking at cash alone. Auditors, investors and acquirers all scrutinise the deferred revenue schedule because it reveals whether reported revenue is being recognised correctly under revenue recognition rules.
A schedule is step one. Mowt reads your Stripe billing and turns it into clean recognised revenue, deferred balances, MRR and ARR - updated daily, audit-ready.
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