Definition
Money received for goods or services not yet delivered—a liability because you owe customers something in return. It's the accounting version of taking someone's money and promising to do the work later, which is only legal when properly documented.
Example Usage
The software company's deferred revenue account swelled with annual subscriptions, creating a liability that would convert to revenue monthly.
Origin
Formal accounting concept developed with accrual accounting standards in the early 20th century.
Fun Fact
SaaS companies love deferred revenue because it represents future guaranteed income, though accountants insist on calling it a liability to keep everyone humble.
Source: Accrual accounting terminology
Related Terms
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See “deferred revenue” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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