Glossary
Deferred revenue
Deferred revenue is money a business has collected for goods or services it has not yet delivered. It is a liability, not income, because the obligation to perform is still outstanding. Subscription, retainer and deposit-taking businesses carry large balances of it, which is why their bank balance can look far healthier than their earnings. Recognising it as revenue too early overstates profit and understates what the business still owes its customers.
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