Close & reporting
Deferred revenue
Cash collected before it is earned tracked separately from revenue for a Canadian business, released to the profit and loss on the schedule that matches when the work is actually delivered, and reconciled alongside the GST/HST already charged on the deposit that created it.
Management report
Illustrative client · August 2026
CAD
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
What the schedule tracks
A deferred revenue schedule is built by customer and contract, with the monthly release calculated against delivery, usage or straight-line terms depending on the contract. The deferred revenue balance is reconciled to the general ledger every month, and renewal or cancellation adjustments are reflected in the schedule as they happen rather than at year end.
GST/HST was already charged, and that matters
In Canada, GST/HST is generally charged and remitted on a deposit or prepayment at the time it is received, before the revenue itself is recognized for accounting purposes. That means the deferred revenue schedule and the GST/HST already collected on that same cash move on different timelines, and the reconciliation has to keep both straight rather than assuming they track together.
Deposit or deferred revenue
A customer deposit against future work and deferred revenue often look identical on a bank statement. The distinction, and which one applies, is confirmed contract by contract rather than defaulted to whichever is easier to book.
When a contract cancels
The remaining deferred balance for a cancelled contract is adjusted out of the schedule in the month the cancellation is confirmed, with a note explaining the change and, where relevant, the GST/HST treatment of any refund.
Questions
Frequently asked questions: Deferred revenue
Is a customer deposit the same as deferred revenue?
They often look similar on a bank statement but are tracked differently: a deposit against future work is usually deferred revenue until that work is delivered, confirmed contract by contract.
Does GST/HST complicate the deferred revenue schedule?
Yes. GST/HST is generally charged on a deposit when it is received, ahead of when the revenue itself is recognized, so the schedule has to reconcile both timelines separately.
Can the schedule handle a mix of monthly and annual contracts?
Yes, each contract releases on its own term, so a monthly and an annual customer sit correctly in the same schedule side by side.
Which software do you track this in?
QuickBooks Online, Xero or Sage 50, matched to a schedule maintained alongside your existing chart of accounts.
What exactly is included in deferred revenue?
Deferred revenue schedule by customer and contract, and monthly release calculated against delivery, usage or straight-line terms. This work runs inside QuickBooks Online or NetSuite, whichever your business already has in place, and it rolls into your regular monthly close rather than sitting off to the side as a separate, unreconciled process.
Is deferred revenue the same as a customer deposit?
They often look similar on a bank statement but are tracked differently: a deposit against future work is usually deferred revenue until that work is delivered.
How does a cancellation affect the schedule?
The remaining deferred balance for that contract is adjusted out of the schedule in the month the cancellation is confirmed, with a note explaining the change.
Who reviews the work before it reaches us?
Every deliverable under deferred revenue is reviewed by a senior reviewer before it reaches you. You keep access to the underlying file at every stage, so nothing about the work happens somewhere you cannot see it.
What is included in deferred revenue?
Deferred revenue covers deferred revenue schedule by customer and contract and monthly release calculated against delivery, usage or straight-line terms. The exact scope is agreed and set out in writing before work starts, so you know precisely what is and is not covered before the first deliverable arrives.
Related services
- Close & reportingRevenue recognition (ASC 606 / IFRS 15)Revenue recorded when it is actually earned rather than when cash lands, following the five-step model shared by ASC 606 and IFRS 15, so recurring and multi-part contracts are accounted for correctly.
- Close & reportingAccrualsExpenses and revenue recorded in the period they actually happen, even when the invoice or cash has not moved yet, so the month's numbers reflect that month's activity.
Industries
- SaaSBookkeeping and reporting for subscription software businesses tracking recurring revenue, deferred revenue and burn.
- Agencies and consultanciesBookkeeping for marketing agencies, design studios and consulting firms billing clients on retainers and project fees.
- Professional servicesBookkeeping for professional service firms such as engineering, architecture and IT consulting billing clients by project or retainer.
Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.