Billings

What is Billings?

Billings represent the total amount you invoice customers during a period. It's the cash you expect to collect, regardless of when you can recognize it as revenue under accounting rules.

Billings bridge the gap between bookings (signed contracts) and revenue (recognized income). A customer signs a deal (booking), you send an invoice (billing), and then you recognize revenue over the service period.

Why Billings Matter

Billings are a proxy for cash flow. If billings exceed revenue, you're collecting cash faster than you're recognizing it, which usually means annual prepayments. This is healthy for cash position.

The billings-to-revenue ratio reveals payment terms. Enterprise companies with annual upfront payments often have billings 20-30% higher than revenue. This creates a cash cushion that funds growth.

Calculated Billings

Since billings aren't always reported directly, analysts calculate them from financial statements using the formula: Revenue + Change in Deferred Revenue.

Your quarterly financials:

• Revenue recognized: $800,000
• Deferred revenue start: $400,000
• Deferred revenue end: $550,000

Billings = $800K + ($550K - $400K) = $950,000

You billed $950K but only recognized $800K. The $150K difference went to deferred revenue for future recognition.