Deferred Revenue
Cash collected from customers for services not yet delivered, recorded as a liability until the revenue is earned.
What is Deferred Revenue?
Deferred revenue (unearned revenue) is cash you received but have not yet earned. Annual prepayments, multi-month contracts paid upfront, and retainers collected before work begins create deferred revenue.
Accounting records deferred revenue as a liability: you owe the customer service delivery. As you deliver, deferred revenue converts to recognized revenue.
For cash planning, deferred revenue is not deployable cash. It belongs to customers until earned, even though it sits in your bank account.
Why it matters
A $500,000 bank balance with $120,000 in deferred annual contracts means $120,000 is obligated to future service delivery. Treating it as free cash overstates runway.
True Cash Position subtracts deferred revenue to show what you can actually spend on operations.
Formula
True Cash Position = Bank Balance - Tax Obligations - Deferred Revenue - Committed Payroll
How RunwayCal helps
RunwayCal subtracts deferred revenue from bank balance when computing True Cash Position, giving a realistic view of deployable cash.
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Account for deferred revenue in True Cash
RunwayCal subtracts deferred revenue so your available cash reflects undelivered obligations.
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