What Is Deferred Revenue?

Deferred revenue is revenue you’ve already invoiced or collected but haven’t yet earned.

It represents a liability on your balance sheet because you still owe the service or product delivery.

Examples:

• A customer pays $1,200 upfront for a 12-month subscription
• You recognize $100 per month, and defer the rest

Key Traits:

• Tied to invoicing
• GAAP-compliant
• Appears on the balance sheet as a liability
• Reduces as revenue is recognized

What Is Revenue Backlog?

Revenue backlog is the value of signed contracts where revenue has not yet been recognized.

It is not tied to invoicing and doesn’t appear on financial statements. Backlog includes revenue you’ve committed to deliver in the future, assuming obligations are met.

Examples:

• A 3-year contract for $90,000, but only $30,000 has been recognized this year
• Remaining $60,000 is in revenue backlog

Key Traits:

• Not GAAP-compliant
• Internal forecasting metric
• Includes both recurring and non-recurring revenue (e.g., services)
• Doesn’t require invoicing to count

Key Differences at a Glance

Why It Matters for SaaS Leaders

❌ Mixing up the two can lead to GAAP misstatements

✅ Deferred revenue affects your audited financials

✅ Revenue backlog provides visibility into future performance

You need both:

• Deferred revenue to ensure compliance and accurate reporting
• Revenue backlog to plan and forecast what’s coming next

When to Use Each Metric

How TrueRev Helps You Track Both

TrueRev gives SaaS CFOs and RevOps leaders:

• Real-time views of both backlog and deferred revenue
• ASC 606-compliant recognition schedules
• Tools to prevent misstatements or double-counting

With TrueRev, you don’t have to choose—track deferred revenue for compliance and revenue backlog for strategy.

Final Thoughts

Deferred revenue and revenue backlog may seem similar, but they serve very different purposes. Getting them right is critical for SaaS companies balancing GAAP accuracy with future-facing growth metrics.