# Deferred Revenue

> Deferred revenue is income received by a company for goods or services not yet delivered, recorded as a liability on the balance sheet until the obligation is fulfilled.

- **URL**: https://dodopayments.com/glossary/deferred-revenue

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## What is Deferred Revenue?

Deferred revenue is money received by a company for goods or services that have not yet been delivered. In a subscription model, this occurs when a customer pays upfront for a future period, and the company records it as a liability until the service is provided.

### Why It Matters

- It ensures that revenue is recognized only when it is actually earned, following standard accounting principles.

- It provides a more accurate picture of a company's financial health by separating cash on hand from earned income.

- It helps in tracking the remaining value of service obligations to customers.

- It is a critical metric for SaaS companies to understand their future revenue pipeline.

## Learn More

- [SaaS revenue recognition explained](https://dodopayments.com/blogs/saas-revenue-recognition)
- [How to identify SaaS revenue leakage](https://dodopayments.com/blogs/revenue-leakage-saas)
- [How to build predictable recurring revenue](https://dodopayments.com/blogs/build-predictable-revenue)