Entering prepaid revenue or deferred income

Deferred income (sometimes known as Prepaid revenue) is money your company has already received for a product or service it has yet to deliver. A good example is an annual subscription product, where your customer pays you for the year in advance. You haven't yet delivered the future months' product or service to your customer, so the money they've paid you in advance isn't "earned" yet.

If you're using accrual accounting in your forecast, you'll need to represent that revenue in those future months where you'll be delivering the product or service.

When you enter a Recurring charges revenue stream into your forecast and set its payments so you collect them every 2 to 12 months, LivePlan will automatically calculate prepaid revenue into your Balance Sheet and change in prepaid revenue into your Cash Flow statement.

Make sure your Multi-month charges setting is set to Spread out multi-month charges.

With the subscription entry in place, you will see a Prepaid Revenue line in the Liabilities section of your projected Balance Sheet:

balance sheet prepaid revenue.png

You'll also see a Change in Prepaid Revenue line in the Net Cash from Operations section of your projected Cash Flow:

cash flow change in prepaid revenue.png

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