Deferred Revenue Schedule Template
Money invoiced but not yet earned, released month by month.
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As at [date].
| Contract | Invoiced | Starts | Months | Elapsed | Recognised | Deferred |
|---|---|---|---|---|---|---|
| [add one contract per line] |
What is a Deferred Revenue Schedule?
Deferred revenue is money a customer has already paid or been invoiced for, covering work you have not yet done. A deferred revenue schedule tracks each of those balances and releases them to revenue as the service is delivered. Without one, an annual subscription invoiced in January lands entirely in January's profit figure, your margins look erratic, and an auditor or acquirer has no way to check when the income was actually earned.
Finance teams at any business that bills ahead of delivery keep one: SaaS companies invoicing twelve months up front, agencies taking a retainer, trainers selling a course place, maintenance contractors on annual cover, publishers with subscriptions. It also appears wherever a deposit sits on account before the job starts. The schedule is opened when the invoice is raised, reviewed at every month end as part of the close, and pulled out whenever an auditor, lender or buyer asks how much of your reported revenue was genuinely earned in the period.
The accounting standard that governs when you may recognise the revenue depends on the framework you report under — IFRS 15 for IFRS reporters, ASC 606 in the United States, and the equivalent section of your local GAAP, such as FRS 102 in the UK or Ind AS 115 in India. They agree on the principle and differ on detail and on disclosure. Sales tax treatment is separate again: VAT or GST often falls due on the invoice or payment date regardless of when the revenue is earned, so check your own rules.
The schedule is a working paper, not the ledger. It tells you what the deferred revenue balance should be and how much to release this month; someone still has to post the journal and agree the closing balance back to the balance sheet account. It is also not a cash record — an invoice raised and never paid still sits here, so a customer who defaults leaves you with a deferred balance and a bad debt, two separate problems. And it does not decide whether a performance obligation has been met; that judgement belongs to your accountant.
What to put in a Deferred Revenue Schedule
These are the details this template asks for. Anything left blank is marked in red on the preview so you can see what is still missing.
| Field | What goes in it |
|---|---|
| Business name | For example: Barton Supply Co. |
| Your address | For example: Unit 7, Barton Road, Columbus, OH 43212 |
| Position as at | Free text |
| Deferred revenue | One per line: Contract | Amount invoiced | Starts | Months |
How to write a Deferred Revenue Schedule
List every contract that bills ahead
One row per contract, or per line on the invoice where a single invoice covers different things. Record the customer, the invoice number and date, the total invoiced, the tax excluded, and the period the work covers — start date and end date. A twelve-month licence beginning 15 March runs to 14 March, not to 31 December, and the row has to say so.
Split the invoice into its parts
Bundled invoices are where schedules go wrong. A £6,000 invoice covering a £1,200 setup fee delivered in week one and £4,800 of hosting across the year releases on two different patterns. Break the invoice into separate rows for each deliverable, allocate the price across them, and note the basis you used. Recording it as one blended line makes the first month understate revenue and every later month overstate it.
Choose and record a release method
Straight line by month suits access to a service that runs evenly — support cover, a subscription, a lease of software. Milestone release suits projects with defined stages. Usage release suits metered services. Write the chosen method in the row so the next person can see it, and use whole months only where the contract genuinely starts on the first; otherwise pro-rate the opening and closing months by days.
Run the monthly release columns across
Give the sheet a column for each month of the reporting year. Fill in the amount released in each, so every row reads: opening deferred balance, released this month, closing deferred balance. The row total across all months must equal the net amount invoiced. If it does not, you have a rounding stub or a date error, and the last month is usually where you park the difference.
Agree the closing balance to the ledger
At each month end, total the closing deferred column and compare it with the deferred revenue account in your trial balance. The two must match to the penny. Investigate any gap before you close: the usual causes are a credit note that never reached the schedule, a cancelled contract still releasing, or a journal posted to the wrong account. Sign and date the reconciliation and keep it with the month's papers.
Common mistakes
- Including sales tax in the deferred figure inflates the balance sheet liability and double-counts an amount you have already declared on a VAT or GST return.
- Leaving a cancelled or refunded contract releasing on the schedule keeps posting revenue you will never earn, which someone has to reverse in a later period.
- Starting the release in the month the invoice was raised rather than the month the service began pulls a month of revenue forward on every single contract.
- Building the schedule as one blended line per customer instead of one per deliverable makes it impossible to explain a variance when the client queries an invoice.
- Never reconciling the closing total to the ledger means the two drift apart quietly, and the difference surfaces during an audit when it costs the most to unpick.
Frequently asked questions
What is the difference between deferred revenue and accrued revenue?
They are mirror images. Deferred revenue is cash or an invoice in hand for work not yet done — a liability, because you still owe the customer something. Accrued revenue is work done that you have not yet invoiced — an asset, because the customer owes you. A single project can produce both in the same month if some elements are billed ahead and others in arrears.
Is deferred revenue an asset or a liability?
A liability. You are holding money against an obligation to deliver, so until you deliver, the balance sits on the liabilities side — usually current, unless the service extends beyond twelve months, in which case the portion falling due later is shown separately as non-current. It only becomes revenue, and only reaches the profit and loss account, as the obligation is discharged.
Do I defer revenue if the customer has not paid the invoice yet?
Yes, if you have raised the invoice and recognised a receivable. The trigger for deferral is the unearned obligation, not the cash. You would show a debtor on one side and deferred revenue on the other, and both clear as the work is delivered and the money arrives. If the debt later goes bad, that is a separate write-off, not a reason to unwind the deferral.
How often should the schedule be updated?
Every month, as part of the close, and immediately whenever a contract changes. New invoices are added when raised; cancellations, credit notes and upgrades are applied the moment they are agreed. A schedule updated only at year end is a rebuild rather than a control, and the errors it hides have by then been reported in eleven sets of management accounts.
Can I release deferred revenue early if I need the profit?
No. The release date follows delivery of the obligation, not the shape you would like your results to take. Pulling revenue forward misstates the accounts, and where the business is audited, borrowing against covenants or being sold, the correction tends to be found and to be expensive. If the timing genuinely looks wrong, the question is whether you have described the obligation correctly — ask your accountant.
This page explains general practice and is not legal advice. Requirements differ between countries and, in some cases, between states — check what applies where the document will be used.