Glossary · Reading the business
Deferred Revenue
In short
This is money a business has already received for goods or services it hasn't yet delivered. It's a liability, not earned income, which means the business owes that value to customers in the future.
What it means in a deal
When buying a business, you inherit these obligations. You need to understand the amount of deferred revenue and factor in the future cost of delivering those services or products, as it impacts the working capital required post-acquisition.
Related terms
Common questions about Deferred Revenue
- What if the business I'm buying has existing deferred revenue or unearned income?
- How does a lender underwrite a business acquisition with existing deferred revenue or unearned income?
- Can a partial equity injection come from a deferred management bonus from my current employer?
- How does a lender assess deferred maintenance or capital expenditure needs of an acquired business?
- Can a seller note with deferred payments but no interest count as full standby for equity injection?
- How does declining revenue during due diligence impact loan approval?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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