Close & reporting
Deferred revenue
Finbryn tracks deferred revenue for EU businesses by customer and contract, calculating the monthly release into recognised revenue against delivery, usage or straight-line terms, and reconciling the deferred balance to the general ledger, so subscription and retainer contracts across your entities are recorded correctly each month.
Management report
Illustrative client · August 2026
EUR
| 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.
Cash in the bank is not yet revenue on the books
A retainer, a full-year subscription or a project deposit paid up front sits as a liability, deferred revenue, until the work behind it is actually delivered. Booking it as revenue the moment it lands overstates what the business has genuinely earned, and a business with several entities can end up with that overstatement multiplied across each one if the schedule is not tracked consistently.
Tracking the release, contract by contract
We hold a schedule by customer and by contract, not a single balance figure, recording the amount, the term and the release pattern that fits: straight-line across a subscription period, tied to usage for a consumption product, or tied to specific deliverables for a project retainer. Each month, the schedule calculates the release and books the corresponding entry into recognised revenue.
Why one total figure is not enough for a group
A single deferred revenue number on a consolidated balance sheet cannot tell a finance lead which entity, which customer or which contract is behind it, or when each piece is actually due to release. Holding the detail at contract level, across every entity, is what makes that number auditable rather than just a plug carried forward month to month.
When a contract changes mid-term
A renewal extends the schedule with the new term. A cancellation removes the remaining balance for that specific contract in the month it is confirmed, with a written note, rather than letting the figure quietly shrink without explanation.
Related work
The release pattern itself comes from revenue recognition under IFRS 15, and the schedule sits alongside accruals in the monthly close.
Questions
Frequently asked questions: Deferred revenue
How is deferred revenue different from a customer deposit?
They can look similar in the bank account but are tracked differently: a deposit taken against future delivery is generally deferred revenue until the work behind it is actually done.
Do you track deferred revenue separately for each entity or just as one group total?
By entity, customer and contract. A single group total does not tell you which specific contracts are driving it or when each one is due to release.
What happens to deferred revenue if a subscription customer upgrades mid-term?
The schedule is adjusted to reflect the new pricing and term from the point of the upgrade forward, with the change documented rather than blended silently into the existing balance.
How do you handle a refund on a partially recognised subscription?
The unrecognised portion of deferred revenue is reversed against the refund, and the already-recognised portion is adjusted only if the refund covers a period that had already been reported on in a prior close. We confirm the exact split with you before the adjustment is posted to the books.
Can deferred revenue schedules handle usage-based billing on top of a subscription?
Yes, usage-based charges are recognised as they occur alongside the subscription's straight-line schedule, since the two components typically satisfy different performance obligations under IFRS 15 and need separate treatment. We confirm the split with you once, at setup, before it becomes standard practice.
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
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.