Deferred revenue is the cash a company has received for services that have not yet been performed — it is a liability on the balance sheet until the service is delivered.
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How does deferred revenue help SaaS cash flow?
By collecting annual payments upfront, SaaS companies get "Free Working Capital" they can use to fund growth and hiring, even before that revenue is officially "earned" in an accounting sense.
Knowledge Challenge
Mastered Deferred Revenue (Unearned Revenue)? Now try to guess the related 6-letter word!
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