Deferred revenue

Cash landing does not mean work is done

An agency paid a full retainer up front, or a subscription business billed annually, sees money land in the account the day the deal closes, often months before the work that money covers has actually happened. Recording all of it as revenue on day one flatters that month and quietly understates every month that follows.

Holding it until it is earned

What is owed gets tracked by customer and by contract, then released to the profit and loss on a schedule tied to delivery, usage or a straight-line term, whichever the underlying agreement actually calls for. That schedule reconciles to the general ledger balance every month, so the two numbers cannot silently drift apart.

Not the same thing as a deposit

A refundable holding deposit and a payment against a signed, non-refundable contract can arrive through the same bank feed on the same day, but they need different treatment: only the second sits in this schedule as revenue still to be earned.

When a customer leaves early

If a contract cancels partway through its term, whatever remains in the schedule for that customer comes out the same month it happens, with a short note on file explaining the reason, rather than lingering as an unexplained balance someone has to investigate later.

A separate clock from VAT

The Federal Tax Authority's tax point rules can require VAT on an invoice well before this schedule releases the matching revenue for management reporting purposes. The two are tracked on their own timelines rather than assumed to move together.

Where it is kept

Reconciled every month alongside the close, checked by a senior reviewer, inside whichever accounting file the business already runs.