Deferred Revenue


Objective:

To ensure that all the costs and income are amortised in the correct month, taking up necessary expenses to produce accurate financial information for the client.

When the Company receives cash in advance for goods delivered or services rendered at a future date, this is recorded as deferred revenue. As the service or good is delivered, the liability comes off the books and the revenue is recognized. Deferred revenue is common among software providers, who require up-front payments in exchange for service periods that may last for many months.

  • PIKOHANA ensures that the monthly additions of deferred revenue are in alignment for each Sales Invoice produced to the customers (according to standard contracts/agreement period).
  • Schedules are updated and the balances are reconciled with the Xero closing balance every month.


Was this article helpful?