3 ms·
On the question of when to recognise revenue, I'd hope that serious investors know the difference between accrual and cash accounting. In particular, that book
by jacques_chester 11y ago
On the question of when to recognise revenue, I'd hope that serious investors know the difference between accrual and cash accounting.
In particular, that bookings come before sales come before cash, and that the three are reported independently.
- iamshadowbanned 11y agoCould you expand on that? How are you differentiating between a 'booking' and a 'sale'? My interpretation of this was that bookings == 'contractually agreed upon commitments to buy' (basically, sales), and then revenue flows thereafter, so if I sold a million dollars, and had $200k of churn in june, my June bookings would be $800k. Are you referring to a 'sale' as some sort of 'customer has stayed past a probation period and the salesman is eligible for a commission' point? I'd love to have this cleared up.
- jacques_chester 11y agoSale and cash are well understood in accounting circles. "Forward booking" is, I understand, much fuzzier. What may count as a sale (eg, I receive a purchase order) may differ from the forward booking (someone scribbles on an MoU). Depending on the organisation, sales staff can be paid at different times in that pipeline. And unsurprisingly there's dropoff at each stage. I guess I should end by pointing out that I am not an accountant and this isn't accounting advice.
- ci5er 11y ago> I'd hope that serious investors know the difference between accrual and cash accounting. This comment surprises me a little. Have you ever met a serious investor that doesn't know the difference?
- jacques_chester 11y agoI would expect not to. That said, I might sail into No True Scotsman territory, so I should stop here.