One contract.
Four different numbers.
A signed deal, an invoice, earned revenue and money in the bank are four separate events with four separate dates. Treating any of them as the others is how a profitable-looking SaaS company runs out of cash — and how a $150,000 contract gets reported as $150,000 of ARR.
| Number | The event | The question it answers | Where it lives |
|---|---|---|---|
| Booking | The contract is signed | What did we sell? | The sales system. Nowhere in your financial statements. |
| Billing | The invoice is issued | What have we asked to be paid? | Accounts receivable, and deferred revenue if the service is not delivered yet. |
| Recognized revenue | The service is delivered | What have we earned? | The top line of the P&L. |
| Collection | The money arrives | What can we actually spend? | The bank account and the cash flow statement. |
| MRR / ARR | Normalized from the contract | What is the recurring run-rate? | Operating dashboards — an operating metric, not an accounting line. |
The same contract, followed from signature to the last month of recognized revenue. Every column totals $54,000 over the year. None of them agree in any single month, and that disagreement is the whole subject.
Contract signed and invoiced
A $48K annual subscription plus a $6K implementation fee, invoiced up front on Net 30. One month of service has been delivered and the fee is earned, so $10,000 is revenue and $44,000 is deferred.
The invoice is paid
Cash arrives a month after the invoice. Nothing was sold and nothing was billed this month, and the company collected more than it has earned all year.
Service is delivered
Deferred revenue unwinds by $4,000 a month. The P&L shows steady revenue while the bank balance does not move at all.
The term ends
Deferred revenue reaches zero. Over the full year the booking, the billings, the revenue and the cash all total $54,000 — they just never agreed in any single month.
Enter one contract and the calculator returns the booking, the invoice schedule, monthly recognized revenue, the deferred revenue and receivables balances, the cash collections, and a proof that all four totals reconcile. Then it re-bills the same contract four ways so you can watch the cash move while the revenue does not.
Reconcile a contract from booking to cash
The contract
Reference (optional)
Signed (YYYY-MM)
Service starts (YYYY-MM)
Recurring amount per month ($)
Term (months)
One-time fees ($)
How it bills and collects
Changes during the term (optional)
Expansion per month ($)
Expansion after (months)
Service ends early after (months)
$54,000
Total contract value in Jan 2026. Not revenue, and not ARR.$48,000
$4,000 of MRR annualised — the recurring part only.$44,000
Billed and not yet earned. A liability, however good the cash feels.1 month
First collection lands in Feb 2026.The same contract, four ways
Over the life of the contract these four totals are identical. They differ only in which month they land in — which is the entire distinction this page is about.The monthly schedule
Booking, billing, revenue and cash for every month of the contract, with the three balance-sheet accounts that explain the gaps between them.| Month | Booked | Billed | Recognized | Collected | Deferred | Unbilled | Receivable | MRR |
|---|---|---|---|---|---|---|---|---|
| Jan 2026 | $54,000 | $54,000 | $10,000 | — | $44,000 | — | $54,000 | $4,000 |
| Feb 2026 | — | — | $4,000 | $54,000 | $40,000 | — | — | $4,000 |
| Mar 2026 | — | — | $4,000 | — | $36,000 | — | — | $4,000 |
| Apr 2026 | — | — | $4,000 | — | $32,000 | — | — | $4,000 |
| May 2026 | — | — | $4,000 | — | $28,000 | — | — | $4,000 |
| Jun 2026 | — | — | $4,000 | — | $24,000 | — | — | $4,000 |
| Jul 2026 | — | — | $4,000 | — | $20,000 | — | — | $4,000 |
| Aug 2026 | — | — | $4,000 | — | $16,000 | — | — | $4,000 |
| Sep 2026 | — | — | $4,000 | — | $12,000 | — | — | $4,000 |
| Oct 2026 | — | — | $4,000 | — | $8,000 | — | — | $4,000 |
| Nov 2026 | — | — | $4,000 | — | $4,000 | — | — | $4,000 |
| Dec 2026 | — | — | $4,000 | — | — | — | — | $4,000 |
Does the billing structure change what you earned?
Your contract, re-billed four ways. The recognized revenue column is identical in every row — invoice timing is a cash and balance-sheet decision, never a revenue one.| Structure | Revenue recognized | Cash by month 3 | Peak deferred | Peak receivable |
|---|---|---|---|---|
| Annual, in advanceOne invoice up front for the whole year. | $54,000 | $54,000 | $44,000 | $54,000 |
| Quarterly, in advanceFour invoices a year, each at the start of the quarter. | $54,000 | $18,000 | $8,000 | $18,000 |
| Monthly, in advanceBilled at the start of each month of service. | $54,000 | $18,000 | $0 | $10,000 |
| Quarterly, in arrearsBilled after each quarter of service — revenue is earned months before it is billed. | $54,000 | $18,000 | $0 | $18,000 |
One contract, four dates
A founder signs a $48,000 annual deal on 12 January, invoices the whole year up front, and the money lands in February. By the end of January the company has booked $48,000, billed $48,000, earned $4,000 and collected nothing. Four numbers, all correct, all describing the same contract. Every argument about whether a SaaS company is "at $48K" is really an argument about which of these four somebody meant.
The confusion is not sloppiness. Each number exists because a different question needed answering. Sales needs to know what was sold in the period, and that is fixed at signature regardless of when the service runs. Accounting needs to know what has been earned, and that only accrues as the service is delivered. Treasury needs to know what has arrived. Collapsing them into one figure does not simplify the business; it just picks one question and answers the other three wrong.
The gaps between the four are not errors to be reconciled away — they are balance-sheet accounts. Billed-but-not-earned is deferred revenue, a liability. Earned-but-not-billed is a contract asset. Billed-but-not-collected is accounts receivable. If you have ever wondered why a profitable-looking SaaS company runs out of cash, the answer is usually sitting in one of those three.
Why a booking is the most dangerous of the four
A booking is the only one of the four numbers with no accounting definition at all. It is a commercial convention, and every company draws it slightly differently: some count total contract value, some count the first year only, some count annualised value at signature, some quietly include renewals that have not been signed. None of those is wrong, but a booking number without its definition attached is not information.
It is also the number most likely to be mistaken for ARR. A three-year $150,000 contract is a $150,000 booking and a $50,000 ARR contribution, and treating the first figure as the second overstates the company threefold. The same mistake in the other direction shows up when a founder signs a large multi-year deal and cannot understand why the bank balance has not moved: the booking happened, the billing has not.
Used properly, bookings are the earliest signal you have. They lead billings, which lead revenue, which leads cash. A quarter of strong bookings tells you what the next several quarters of revenue look like — which is exactly why it is worth keeping the word attached to a definition instead of letting it float.
| The decision | The number | Why that one |
|---|---|---|
| Sales planning and quota | Bookings | Credit the period the deal was signed in. Waiting for the service to be delivered would make a January close look like an April win. |
| The P&L and your margins | Recognized revenue | Only delivered service is earned. Anything else overstates profitability and understates deferred revenue. |
| The balance sheet | Deferred revenue, AR and contract assets | These three accounts are the whole difference between what you have billed and what you have earned and collected. |
| Cash forecast and runway | Collections | Runway is built from money that has arrived. An invoice on Net 60 is not runway for two months. |
| Board and investor reporting | MRR or ARR, with the bridge | Normalized recurring revenue is the comparable figure — as long as you say whether it is billed, contracted or recognized. |
| A financing conversation | Recurring revenue, plus the collection profile | A lender sizes repayment against recurring revenue that will actually be collected during the repayment period, not against the contract value you signed. |
Annual contract, prepaid up front
Book the full contract value at signature. Bill once. Recognize a twelfth each month. The unearned remainder sits in deferred revenue, which is a liability — the cash is yours to spend and the obligation is still outstanding.
Annual contract, billed monthly
Identical bookings, identical recognized revenue, completely different cash. Deferred revenue stays near zero because you never bill ahead of delivery. This is the cleanest demonstration that billing cadence is a cash decision, not a revenue one.
Billed in arrears
Revenue is earned before the invoice exists, so the gap is a contract asset — unbilled receivable — rather than deferred revenue. It is the mirror image of prepayment and it is the reason "billings" can run below revenue in a growing month.
Implementation and onboarding fees
Not recurring, so they belong in neither MRR nor ARR. They usually ride on the first invoice and are earned as the implementation work is performed. Leaving them in a recurring-revenue figure is one of the fastest ways to lose credibility with a lender.
Usage or overage revenue
Recognized as it is consumed, and outside the committed recurring base. Only the contractual minimum is committed; the rest is real revenue that nobody has promised in writing.
Discounts
A discount reduces the contract value, so it reduces the booking, the billing and the recognized revenue together. A discount applied only to the invoice while the booking stays at list price inflates every bookings-to-revenue ratio you will ever calculate.
Mid-term upgrades and expansion
An expansion is a new booking on its signature date and new recurring revenue from its effective date. The two are rarely the same month, which is why an expansion-heavy quarter can show strong bookings and flat MRR.
Cancellations and late payment
Ending service early stops recognition from that date and reverses the unearned portion of deferred revenue. Late payment does none of that: the revenue is still earned and the invoice still exists. It moves cash only, and it sits in accounts receivable while it waits.
Counting total contract value as current ARR
A three-year deal is reported at three times its annual run-rate. Every growth rate and valuation multiple built on it is wrong in the same direction.
Annualize the recurring portion: contract value ÷ term in years, or MRR × 12. Report TCV separately if you want to show deal size.
Treating an invoice as revenue
Revenue is pulled forward into the month you billed, the P&L shows a spike that has nothing to do with delivery, and deferred revenue never appears on the balance sheet.
Recognize as the service is delivered. The invoice determines when cash is due, not when revenue is earned.
Double-counting renewal bookings
A renewed customer is counted as new business, so bookings grow while recurring revenue is flat. The gap eventually shows up as a growth rate nobody can reproduce from MRR.
Split bookings into new, expansion and renewal, and report them separately. Only the first two change the run-rate.
Ignoring deferred revenue
The prepaid year looks like profit. It is a liability: you have the cash and you still owe eleven months of service.
Carry a deferred revenue balance and watch it unwind. A growing balance is good news about cash and a real obligation at the same time.
Building runway from billings
Cash that is invoiced but unpaid gets spent before it arrives. On Net 60 with slow payers, that is a two-month hole in a forecast that looked fine.
Forecast from collections and track accounts receivable ageing separately. An invoice is a claim, not a balance.
How an underwriter reads the same contract
A recurring-revenue lender is not underwriting your bookings. Bookings are the number with no accounting definition and the most room for interpretation, so an underwriter converts them into the two things that can be verified: recurring revenue that is actually billing, and cash that has actually been collected. That is why connecting billing and accounting data is a shorter conversation than sending a spreadsheet — it replaces a claim with a reconciliation.
The collection profile matters as much as the revenue. Two companies with identical ARR are not identically fundable if one prepays annually and the other bills monthly on Net 60: the first has already collected the year, the second is carrying two months of revenue in receivables. Repayment comes out of cash, so the timing of collection is part of the credit, not a detail beneath it.
Three things get discounted quickly. One-time implementation fees dressed up as recurring revenue. Bookings for contracts whose service has not started, because nothing has been delivered and nothing has been collected. And a receivables balance that is ageing — an invoice nobody has paid in ninety days is a question about the customer, not about your growth.
The mirror image holds too. A founder who presents bookings, billings, revenue and cash as four separate numbers, with the deferred revenue and receivables balances that explain the gaps, is describing a business they clearly understand. That reconciliation is doing more work in a credit decision than another point of growth would.
What this calculator assumes
The schedule treats the subscription as a single performance obligation satisfied rateably over the service term, which is the ordinary treatment for a SaaS subscription and nothing more complicated than that. One-time fees are billed on the first invoice and treated as earned when the service they enable begins. Every invoice is assumed to be collected in full, so bad debt and disputes are absent by design.
It runs in whole months. Payment terms are rounded down to the nearest month, so Net 30 collects in the following month and Net 15 collects in the invoice month. Billing monthly in arrears therefore shows no unbilled balance here even though a real contract asset exists for part of the month — a limit of monthly resolution, not a claim that the asset is not there.
This is educational planning material, not accounting advice, and it is not an ASC 606 or IFRS 15 compliance engine. Variable consideration, material rights, multi-element arrangements and mid-flight contract modifications all change the treatment. If your contract has any of those, the schedule below is a useful shape to bring to a qualified accountant rather than an answer to file.
See what your predictable
recurring revenue can support.
The gap between the month revenue is earned and the month cash arrives is the part founders end up financing. Connecting your billing and accounting data replaces the schedule you just built with figures an underwriter can verify. Founderpath funds bootstrapped B2B SaaS from $10K MRR, with no equity and no board seats.
Recurring revenue read from billing data, not from a contract value you typed.
One-time implementation fees stay out of the recurring base, the way an underwriter reads them.
Repayment sized against revenue that will actually be collected during the term.
Founderpath starts at $10K MRR of recurring software revenue.
Every recurring-revenue number, grouped by the decision it informs.
What your signed book will be billing once every dated contract takes effect.
Normalize the recurring part of these contracts into a monthly figure.
Annualize recurring revenue — not total contract value.
Where deferred revenue and receivables actually sit in your ledger.
Margins built on recognized revenue, not on what you invoiced.
Carry the billing and collection profile into a full plan.
How lenders turn contracted recurring revenue into capital.
What Founderpath funds, and the recurring revenue it underwrites.
A booking is the value of a contract at the moment it is signed; a billing is an invoice you have issued. Bookings happen once, at signature, and cover the whole contract term. Billings happen on the schedule the contract specifies — annually up front, quarterly or monthly — and only cover the period being invoiced. A $48,000 annual contract signed in January is a $48,000 booking in January, but if it bills monthly it produces twelve $4,000 billings across the year. Bookings are a commercial metric with no accounting definition; billings appear on your balance sheet as accounts receivable and, where the service has not been delivered yet, deferred revenue.
Bookings are what you sold; revenue is what you have earned by delivering the service. They are separated by time and by accounting treatment. A $48,000 annual contract signed on 12 January is a $48,000 booking that month, but it produces only about $4,000 of recognized revenue in January because only one month of service has been delivered. Bookings are recorded at signature regardless of delivery, appear nowhere in your financial statements, and include contract value you have not earned. Revenue accrues as the performance obligation is satisfied and is the top line of your P&L.
No. Billings are invoices issued; revenue is service delivered. When you invoice ahead of delivery — an annual prepay, for example — billings exceed revenue and the difference is deferred revenue, a liability on your balance sheet. When you invoice in arrears, revenue is earned before the invoice exists and the difference is a contract asset, sometimes called unbilled receivables. The two numbers converge only over the full life of a contract. Treating an invoice as revenue pulls income into the month you billed and hides the obligation you still owe.
Add up the value of the contracts signed in the period. The critical part is stating which value you mean, because there is no standard definition: total contract value counts the whole term, annual contract value counts twelve months, and some companies book only new and expansion business while others include renewals. For a three-year $150,000 contract, TCV bookings are $150,000 and ACV bookings are $50,000. Always publish the definition alongside the number, split bookings into new, expansion and renewal, and never present a TCV bookings figure as ARR.
No. ARR is the annualised value of recurring revenue that is under contract and in service, whereas a booking is the value of a contract at signature over its whole term. A three-year $150,000 contract adds $50,000 to ARR, not $150,000. A contract signed today that starts in three months is a booking today and contributes nothing to ARR until service begins. One-time implementation fees are part of the booking and belong in neither ARR nor MRR. Confusing the two overstates a company by a multiple of its contract length.
Deferred revenue is money you have billed, and usually collected, for a service you have not yet delivered. It is a liability, not income. A customer who prepays $48,000 for a year creates $48,000 of deferred revenue on day one, which unwinds by roughly $4,000 a month as the service is delivered and recognized as revenue. A growing deferred revenue balance is a good sign about cash collection and a real obligation at the same time. Ignoring it is the most common way a prepaid annual contract gets mistaken for profit.
No. Billing cadence changes when cash arrives and how large your deferred revenue balance is; it never changes when revenue is recognized. The same $48,000 annual contract recognizes about $4,000 a month whether you invoice it once up front or twelve times. What annual prepay does change is real and valuable: you collect the full year immediately instead of over twelve months, which improves cash and reduces the receivables you are carrying. That is a cash and working-capital benefit, not a revenue one.
Report recurring revenue — MRR or ARR — as the headline, and say explicitly whether it is billed, contracted or recognized. Then show the bridge: bookings for what you sold, billings for what you invoiced, recognized revenue for what you earned, and collections for what arrived, with the deferred revenue and accounts receivable balances that explain the gaps. Lenders underwrite recurring revenue that is verifiable in billing and accounting systems and discount bookings for contracts that have not started. Presenting all four separately signals that you know which part of your revenue is earned and which is still a promise.
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