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Revenue backlog is the income a company is yet to realize from the goods or services it has provided.
Revenue backlog shows how much money a company will earn in the future. It usually comes from signed contracts that say payment will be made at a later date. Therefore, a high backlog means that a company will have strong earnings in the future or that they are having trouble somewhere in their revenue recognition process.Â
The Difference Between Revenue and Invoicing Backlog
Invoicing backlog represents invoices that the company has yet to issue or process. For example, before implementing Nitrobox, Oviva had a backlog of 4,000 invoices per month. This invoicing backlog required significant time and cost to address—until they deployed Nitrobox.
On the other hand, if Oviva had completed work or provided services for clients under contract but not yet billed or collected payment, that would be revenue backlog.Â
The Difference Between Revenue Backlog and Deferred Revenue
These are two sides of the same coin but from different viewpoints. Deferred revenue, also known as unearned revenue, comes from customers’ advance payments for products or services that haven’t been delivered yet. This means the company owes a product or a service to the customer.
If a company receives payment for a product to be delivered in the future, it’s deferred revenue. However, if a company has delivered a product or service and is awaiting payment, it’s revenue backlog.