What it means
HubSpot is a CRM, and no money moves through it. A closed-won deal isn't an entry in the books. Its job in accounting is earlier and quieter: it's usually the first place a contract's terms get written down, and those terms decide how revenue is recognized.
A customer signs a 12-month, $12,000 contract and is invoiced on day one. The invoice creates a receivable and $12,000 of deferred revenue, because nothing has been earned yet. When the customer pays, cash goes up and the receivable goes away.
Each month, $1,000 moves from deferred revenue to revenue as the service is delivered. After three months, revenue shows $3,000 and deferred revenue still holds $9,000. The $12,000 booking hasn't changed. It's the size of the contract, while revenue is the part of it earned so far.
List the deals that closed this month and check each against the signed contract, the invoice in the ledger and a line in the revenue schedule. A deal with no invoice, or a schedule built from CRM dates that differ from the contract, is how revenue lands in the wrong month.
Then tie deferred revenue on the balance sheet to the unearned amounts left across all schedules.
Revenue recognition sets the rules and ARR and MRR are the metrics built on top of them. Stripe is often where the same contracts get charged.
Why it matters. Revenue recognition starts with the contract: what you sold, for how long, and when you deliver it. Your CRM is usually the first place those terms get written down.
HubSpot isn't a ledger, and we don't connect to it. We work only in QuickBooks Online and Xero. This page covers how HubSpot shows up in the books kept there.
The entry, worked
A customer signs a 12-month, $12,000 contract and is invoiced the full amount on day one.
| Account | Debit | Credit |
|---|---|---|
| Accounts receivable | $12,000.00 | |
| Deferred revenue | $12,000.00 | |
| Total | $12,000.00 | $12,000.00 |
Nothing is earned yet. Each month, $1,000 moves from deferred revenue to revenue as the service is delivered.
Common questions
When do I recognize revenue on a signed deal?
As you deliver the service, not when the deal closes or the invoice goes out. A 12-month subscription is usually earned evenly over the 12 months.
Is a booked deal the same as revenue?
No. A booking is a signed contract. Revenue is the part of it you've earned so far.
Do sales commissions get expensed right away?
Not always. Under ASC 340-40, commissions paid to win a contract are often capitalized and expensed over the period the customer is expected to stay. There's a practical expedient to expense them right away when the amortization period would be a year or less.
Read further
- Accounts payable process for startups: intake to paymentFounder guide · 7 min
- Audit-ready books before your Series AFounder guide · 4 min
- SaaS revenue recognition under ASC 606, step by stepFounder guide · 6 min
- Revenue recognitionRelated · US GAAP · ASC 606
- Deferred revenueRelated · US GAAP · ASC 606
- Contract costsRelated · US GAAP · ASC 340-40
- StripeRelated · Payments
General information for US companies, not tax, legal or accounting advice. Check the specifics with a CPA before you act on them.