Revenue Recognition for SaaS Companies Under ASC 606
Use revenue recognition as an operating control, not a year-end cleanup task. If you make decisions from cash balance alone, you can spend against cash that is not earned yet. Under ASC 606, cash collected before you transfer the promised service is a [contract liability](https://dart.deloitte.com/USDART/home/codification/revenue/asc606-10/roadmap-revenue-recognition/chapter-14-presentation/14-2-contract-liabilities), commonly called deferred revenue, until that service is delivered.
