What Is Accrued Revenue and How Is It Recognized in a Subscription Business?
Accrued revenue is revenue a company has earned by delivering subscription services before it issues an invoice or receives payment. in practice, this means revenue is recorded as a receivable on the balance sheet and recognized on the income statement as the service period progresses.
In a subscription business, recognition usually happens ratably over the service term or based on actual usage when that better reflects performance. finance and operations teams can reconcile timing differences and reporting by using HubSpot CRM reporting to link subscription events with customer records and invoices.
For example, an annual plan billed up front is typically recognized monthly so revenue matches the delivery of service. teams maintain accrual schedules and compare recognized revenue to invoiced amounts to ensure accurate month-end financials.
How Does Accrued Revenue Relate to Deferred Revenue and Accounts Receivable in a CRM-Backed Billing Workflow?
Accrued revenue is recorded when goods or services have been delivered but no invoice has been issued. it represents earned income that sits between deferred revenue and accounts receivable in the accounting lifecycle.
Deferred revenue is cash received before performance and appears as a liability until obligations are satisfied, while accounts receivable records amounts that have been invoiced but not yet collected. in a CRM-backed billing workflow, teams identify the trigger points that move amounts from liability to revenue and then to receivable so accounting and collections stay coordinated.
To tie those records together, finance and customer teams can use HubSpot CRM reporting to compare recognition schedules with billing events, and HubSpot Sales Hub deal records to surface invoice and payment status on customer timelines. this alignment helps reconciliations at month end and improves visibility into timing differences between earned revenue and cash collection.
When Should a Company Record Accrued Revenue for Services Delivered but Not Yet Invoiced in a Contract-Based Sales Cycle?
A company should record accrued revenue when the contractually agreed performance obligations have been satisfied and there is objective evidence that services were delivered, even if an invoice has not yet been issued. Recognition depends on the contract terms and the point at which control or acceptance of the service passes to the customer.
Timing choices can be comparative: some organizations wait for formal client acceptance or invoicing to reduce audit exposure, while others recognize revenue as milestones are completed to reflect the economic activity in the right period. Establishing clear recognition criteria and consistent internal controls helps mitigate risk and supports reliable month-end reporting.
Use HubSpot Sales Hub deal records to capture delivery milestones and acceptance dates for each contract, and use HubSpot CRM reporting to reconcile recognized amounts with invoicing and company properties. That alignment makes it easier to compare recognition policies across deals and to defend timing decisions during reviews or audits.
What Are the Advantages and Disadvantages of Recognizing Accrued Revenue Versus Deferring Revenue for Long-Term Contracts?
Recognizing accrued revenue records income when contractual performance obligations are met, giving a clearer view of period profitability but creating a gap between reported revenue and cash collection that can increase apparent volatility.
Deferring revenue delays recognition until cash is received or obligations are indisputably satisfied, which can reduce audit risk and smooth reported results, yet it may understate current operational performance and complicate comparisons across contract types.
To balance accuracy and control, finance and customer teams reconcile delivery milestones with billing events; HubSpot CRM reporting can surface timing differences, and HubSpot Sales Hub deal records can track milestones and invoice status to support consistent recognition decisions.
How Can HubSpot's CRM and Billing Integrations Be Configured to Track Accrued Revenue Automatically?
Automatically tracking accrued revenue depends on translating delivery events into recognition rules and capturing those triggers in your CRM. Clear mapping between milestones, invoices, and service periods is essential so recognition occurs in the correct accounting period.
Start by configuring workflows or custom objects that create accrual entries when teams log delivery milestones or acceptance dates. Use HubSpot CRM reporting to join those entries with invoice status, and use HubSpot Commerce Hub subscription analytics to account for proration, mid-cycle upgrades, and differing billing cycles.
Plan for edge cases such as partial deliveries, multi-element contracts, and multi-currency billing by storing adjustment reasons and effective dates as properties for each accrual. Regular reconciliation and a clear audit trail let finance validate automated accruals before month-end close.
What Are a Revenue Operations Manager's Priority Metrics for Accrued Revenue When Aligning Sales and Finance Forecasts?
A revenue operations manager prioritizes metrics that reveal whether earned income is recorded in the correct period and how timing differences affect cash forecasts. primary concerns include recognition timing, unbilled backlog, and the gap between recognized revenue and cash collection.
Practical metrics to monitor are accrual run rate, days to invoice, unbilled backlog, forecast accuracy, and adjustment rate. teams surface those indicators in HubSpot CRM reporting and use HubSpot Sales Hub deal records to tag delivery milestones and invoice status for each account.
Make reconciliation routine by comparing accrual schedules with invoices every close, logging exception reasons, and measuring how often recognized amounts are adjusted in later periods. that discipline increases finance confidence in sales forecasts and reduces month-end surprises.