Section 02 • 2 guides

SaaS Revenue & Metrics

Software revenue is the easiest kind to misstate. Cash arrives in annual lumps, the work is delivered in monthly slivers, and the gap between the two is a liability most founders have never booked. Get it wrong and every downstream number — MRR, ARR, margin, runway — is wrong with it.

This section covers recognizing subscription revenue properly, keeping a deferred revenue schedule that ties, and producing the metrics a board or acquirer will actually recompute.

Benchmarks

ASC 606

The standard your diligence will be run against

1/12th

Of an annual prepay you have actually earned each month

3–5×

Revenue-multiple range where clean rev-rec moves real money

What SaaS books have to get right

Discipline 1

Recognize, don’t collect

Revenue is earned over the subscription term, not when the cash lands.

Discipline 2

Schedule the deferral

A deferred revenue schedule that ties to the balance sheet, every month.

Discipline 3

Separate the metrics

MRR and ARR come from the schedule, never from the bank account.

Discipline 4

Prepare for diligence

Cohorts, churn, and revenue by customer, reproducible from the ledger.

Everything in this section

2 guides • ordered for reading start to finish

02.1Deferred Revenue: The Liability That Looks Like Good News6 min 02.2SaaS Revenue Recognition Under ASC 606, Without the Jargon8 min

Section 03 next

Tennessee Tax & Compliance →

Franchise & excise, county business tax, sales tax on software, and the filing dates Middle Tennessee businesses actually owe.

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