Blog · Board and management reporting · Finance and FP&A teams
Why sales, finance and the board each quote a different figure for the same quarter, the three definitions behind them, the bridge from bookings to billings to recognised revenue with the timing and the adjustments that separate them, the identity that ties the three together, and the governance rule that every report names which of the three it is showing.
The sales leader reports a record quarter. The CFO reports flat revenue. Both used the same contracts. Bookings, billings and revenue are three measures with three timings, and the argument between them is what happens when a company has no bridge. This guide sets out the three definitions, the bridge, the identity, and the rule that every report names its measure.
| Measure | Counts | When | Owner |
|---|---|---|---|
| Bookings | Total contract value signed | At signature | Sales |
| Billings | Invoices issued | At invoice date | Finance operations |
| Revenue | Value recognised as earned | Per the recognition policy | Accounting |
A three-year contract for $360,000 signed in March, billed annually in advance, recognised monthly: bookings $360,000 in Q1; billings $120,000 in Q1; revenue $10,000 a month from March.
| Line | Q1 |
|---|---|
| Bookings signed | $4.2m |
| Less: booked, not yet billed | ($2.9m) |
| Plus: prior bookings billed this period | $1.6m |
| Billings | $2.9m |
| Less: billed, deferred to later periods | ($1.8m) |
| Plus: deferred revenue released this period | $2.1m |
| Revenue | $3.2m |
Three numbers, each right, and the lines between them are where the argument used to be.
Contract identifiers only.
Σ contracts' total value signed in the period = bookings Σ invoices in the period = billings Σ revenue schedule for the period = revenue Over a contract's full term: bookings = Σ billings = Σ revenue
The last is the one that catches a contract whose billing schedule does not sum to its value, or whose revenue schedule was never built.
Every report that shows a revenue-like figure names which of the three it is and the definition version. A slide titled "Revenue" that shows bookings is the failure the rule exists to prevent, and the reviewer's first question of any deck is which line of the bridge each number sits on.
One word for three measures. "Revenue" on the sales dashboard is bookings.
No bridge. The disagreement is settled by seniority.
Definitions unversioned. The booking definition changed in Q2 to include renewals, and Q1 is now not comparable.
Term identity unchecked. A contract that bills more than it booked, or recognises less than it billed, sits unnoticed for a year.
Mapped once, the contracts, invoices and revenue schedule produce the three measures, the bridge and the identities every month, with the definition version on the page. Covirage builds this from the exports as they are. The metrics governance solution describes the setup, and the versioned definitions guide covers the versioning the rule depends on.
Because sales counts a signed three-year contract at full value in the quarter it was signed, and finance recognises a twelfth of one year of it. Both are correct for their definition. The disagreement is the absence of a bridge, not an error in either number.
All three, in a bridge, on one page. Bookings say how the sales team did. Revenue says how the company did. Billings say what cash is coming. A board that sees one of them alone will ask about the other two, and the answer should already be on the page.
A dated statement of what counts as a booking, when a billing is recognised, and the revenue recognition policy, held in the metric definitions and cited on every report. When any of it changes, the version changes, and the prior periods are restated or marked as under the prior version.