Net Bookings Vs Net Revenue
If you say gross bookings it s an indication of how your sales and marketing teams are doing but it s pretty misleading as to how the business is actually doing.
Net bookings vs net revenue. Bookings a booking is when a customer agrees to spend money with you. It s when the revenue counts on the books. Booking revenue when the revenue has yet to be recognized inflates the amount of revenue for the current reporting period and thus distorts actual earnings.
Compared to bookings which in a specified period of time is the total value of contracts signed revenue refers to a reasonable guarantee that the contracts will materialize. A contract isn t required to have a booking as someone who signs up for a month of your saas offering is committing to that month of service without signing anything. The books look good to investors and.
Bookings can be gross and net. Gross bookings are like saying we filled this bucket up with water sales but neglecting to say there is a hole in the bucket. Revenue on the other hand is when the geniuses in accounting can account for the revenue as being recognized.
Sometimes companies that are under pressure to show better earnings might book revenue prematurely as a way to influence reported earnings.