Re: CRM Reports Large Increase in Unbilled Deferred Revenue
Yeah when I first read that term it reminded me of Enron accounting for their power contracts. If I recall correctly, Enron would take all the projected future revenues and book them today (and also give their execute team bonuses based on those future anticipated revenues).
However, I think it's their way of accounting for subscriptions. Here's a pretty good take on it from an article from February:
ecommercetimes.com
As Tien Tzuo said to me, think of it this way: You do a deal with a company in which you agree to supply your service for three years for $36,000, or $1,000 per month, and you agree to invoice once annually, in advance, for $12,000. At the very beginning, then, you have $24,000 in unbilled deferred revenue and, since you bill in advance, you also have $11,000 in deferred revenue and $1,000 in real live revenue which you can recognize. |
