Accrued revenue

Accrued revenue comes from accrual accounting, where revenue is recorded when it is earned, not when cash arrives. If you have done the work or shipped the goods and the invoice or charge comes later, the amount sits on the balance sheet as accrued revenue (an asset) until it's billed. Where it shows up: - Wholesale orders shipped on net-30 or net-60 terms. - Services billed at the end of the month for work done during it. - Usage-based plans charged after the period ends. It's the mirror image of deferred revenue. Accrued revenue is earned but not yet paid. Deferred revenue is paid but not yet earned, such as a prepaid subscription where the customer paid upfront for deliveries that haven't shipped. For most direct-to-consumer subscription brands, accrued revenue is small, because subscribers are charged before each order ships. Deferred revenue is usually the bigger item, especially with prepaid and annual plans. Why the timing matters. Investors, lenders and tax filings often rely on accrual-based numbers. Mixing cash received with revenue earned can make a month look better or worse than it was. This is general information, not accounting advice. Ask your accountant how these rules apply to your business.