SaaS accounting is not
standard bookkeeping.

Deferred revenue is cash collected for services not yet delivered. When a SaaS customer pays $24,000 upfront for an annual subscription, that amount sits as a current liability on your balance sheet until you deliver the service month by month. It matters because recording it as revenue upfront violates ASC 606 and IFRS 15 — the accounting standards that govern revenue recognition. During any funding round, investors and auditors will look at your deferred revenue balance. If it is not correctly maintained, a restatement is required before the deal can close.

ARR (Annual Recurring Revenue) is the value of contracted recurring revenue normalised to one year. It excludes one-time fees, professional services and variable usage charges. Your P&L shows recognised revenue — which for a fast-growing SaaS company will be lower than ARR if you are winning annual contracts mid-year. Investors use ARR to value the business. Your P&L is a GAAP measure of recognised earnings. Both numbers matter and both need to be tracked correctly.

Yes — Zoho Books has a built-in revenue recognition module that follows ASC 606 and IFRS 15. It distributes revenue across the service period automatically based on rules you configure per product. The challenge is configuration: most accountants do not know how to set up the recognition rules, link them to the correct revenue accounts, or reconcile the deferred revenue balance monthly. Khetanca configures Zoho Books revenue recognition correctly from day one.

Stripe pays out net — after deducting fees, refunds, and failed charge reversals. We record gross subscription revenue on the invoice side, Stripe fees as a payment processing expense, refunds as contra-revenue, and the net payout as the bank receipt. The bank deposit reconciles to gross billing minus fees and refunds. No unexplained differences. This is more complex than it sounds — most accountants just record the bank deposit and lose track of fees and refunds entirely.

Before your first institutional funding round — not after. The most common diligence delay is a restatement triggered by incorrect revenue recognition discovered by the investor's accountants. Fixing deferred revenue retroactively is expensive and time-consuming. Getting it right from month one costs a fraction of what a restatement costs. If you are approaching Seed or Series A, the time to clean up accounting is now, not when the term sheet arrives.