financieel beheer.

What is SaaS Unbilled Revenue?

Auteur: Ioana Grigorescu, Contentmanager

Beoordeeld door: George Ploaie, Chief Operating Officer (COO)

What is SaaS unbilled revenue?

SaaS unbilled revenue is the revenue earned by a SaaS company for delivering services to customers but has not been invoiced for.

This happens commonly when the services provided are recurring, such as monthly subscriptions, or in usage-based models, and the billing is done at a different time.

Unbilled revenue is recognized as an asset on the balance sheet because it represents the company’s right to receive the amount for services provided. Accounting for unbilled revenue is mandatory for accurate financial reporting, effective cash management, and providing the overall financial performance that includes only invoiced revenue.

What are the key differences between unbilled revenue and deferred revenue in a SaaS business?

The differences between the two concepts include:

Unbilled Revenue	Uitgestelde omzet
represents revenue that has been earned but not yet invoiced it is recorded as an asset	represents payments received for services that have not yet been delivered. it is perceived as a liability, reflecting future obligations

Houd in gedachten:

Consider the difference between the two, both technically and financially, to avoid errors.

What is Unbilled Accounts Receivable (AR) and what role does it play for a SaaS business?

Unbilled Accounts Receivable represents earned revenue that has not yet been invoiced and is the balance sheet account where unbilled revenue is typically recorded. This account represents the company’s legal right to bill customers for services or products provided. The management of unbilled AR ensures that billing and accrual accounting align and that the financial statements reflect only earned revenue.

However, if unbilled AR is poorly monitored, it may distort different performance measures and create inaccurate reports.

How should SaaS companies track and report unbilled revenue?

To track and report unbilled revenue, SaaS businesses should:

create clear revenue recognition policies
automate through integrated accounting and billing solutions
record unbilled revenue as earned revenue in the income statement during the service period.

Regular reconciliation is essential to keep SaaS balances accurate and supported by service delivery data.

What factors typically contribute to accumulated unbilled revenue within SaaS companies?

Factors that contribute to accumulated unbilled revenue include:

subscription or usage-based models where billing occurs after services are consumed
delays tied to milestone-based revenue recognition
disruptions caused by billing system migrations or data synchronization issues.

Regular controls are in order to ensure that unbilled balances do not grow unnoticed.

What are some common mistakes SaaS companies make when handling unbilled revenue?

Some common mistakes include:

confusing unbilled revenue with uitgestelde omzet
delaying invoice generation due to internal approval or system issues
using manual billing processes.

These issues result in revenue leakage, inaccurate reporting, and customer complaints.

In addition, if the revenue is not properly classified, it increases the risk of non-compliance with accounting standards.

What are the key steps SaaS businesses can take to strategically reduce unbilled revenue?

SaaS companies can reduce unbilled revenue by considering the following strategies:

matching billing periods with service delivery periods
using an automated billing system to charge based on usage
including clear billing terms in customer contracts.

It is important to monitor SaaS-facturatie activities regularly and make necessary adjustments whenever there is a change in the business operations.

Is unbilled revenue always a negative indicator for SaaS businesses?

Unbilled revenue is not necessarily negative. In many cases, it is due to the fact that services are delivered over a timeframe, and the invoice is issued only at the end of that period, which happens in the case of SaaS subscription or gebruiksgebaseerde modellen.

However, if unbilled balances increase for too long, it may indicate inefficiencies in operational processes or problems in the billing process.

Houd in gedachten:

Monitoring trends, understanding root causes, and addressing avoidable delays are key to ensuring unbilled revenue supports, rather than hinders, financial health.

Conclusie

Unbilled revenue in a SaaS company is derived from services provided but not invoiced yet, and thus requires careful monitoring and control.

To achieve this, one has to understand the difference between unbilled revenue and deferred revenue, put in place effective methods for managing unbilled AR, and introduce an effective billing process to avoid the common mistakes.

With such strategies, SaaS companies can enhance accuracy in financial records, improve cash flow, and achieve a high functional efficiency.