Cash Controls
Part of Startup metrics and management information
Separating a sales pipeline from confirmed revenue
Distinguish pipeline, accepted work, recognised revenue and cash receipts in a startup management report.
A sales pipeline describes possible future business. Here, “confirmed revenue” means revenue recorded for a period under the business’s applicable accounting policy. Keep pipeline, accepted customer commitments, recognised revenue and cash receipts on separate reporting lines. Moving an opportunity to a promising stage does not make it revenue.
Give each figure a clear status
Sales stages should describe what has happened: enquiry, qualified opportunity, proposal, customer acceptance and handoff. Agree the evidence needed to enter each stage. Do not label an expression of interest an accepted order; an accepted order should retain conditions affecting delivery.
AASB 15 sets out criteria for identifying contracts and performance obligations, including whether performance obligations are satisfied over time or at a point in time.
Satisfaction may occur over time or at a point in time, depending on the contract and delivery. An invoice, signature or cash receipt alone does not settle the full accounting treatment. Ask the finance owner or adviser to apply the business’s policy to disputed cases.
| Label in an internal pack | What it describes | What it does not establish |
|---|---|---|
| Pipeline | Potential work at a stated sales stage | An accepted customer commitment |
| Accepted work | Scope and terms agreed with the customer | Revenue recognised in full |
| Recognised revenue | Amount recorded for the period under the applicable accounting policy | Cash already received |
| Cash received | Money recorded as received | The period in which revenue belongs |
If the team uses a “bookings” figure, define it. It might represent accepted contract value, but readers need to know how it treats cancellations, renewals, GST and future service periods. A custom sales label is not an accounting line item.
Distinguishing Sales Pipeline, Accepted Work, Recognised Revenue and Cash Received
- Pipeline
- Potential work at a stated sales stage
- Accepted work
- Scope and terms agreed with the customer
- Recognised revenue
- Amount recorded for the period under the applicable accounting policy
- Cash received
- Money recorded as received
Reconcile the handoff, not just the totals
At period end, compare the accepted-work list with delivery and finance records. Identify proposals awaiting a customer decision, accepted agreements with work to fulfil, completed work awaiting a finance check and cash receipts needing matching to the relevant record. This locates mismatches; it is not a formula for converting one total into another.
A hypothetical service startup could have a customer accept a package that starts next month. Sales may record an accepted commitment now. The finance owner must still determine when revenue is recognised under the applicable policy. If the customer pays in advance, the bank receipt is a cash event; on its own it does not prove current-period revenue.
Explain differences between the figures
When pipeline rises while recognised revenue stays flat, show the stages between them: proposals awaiting decisions, accepted work awaiting delivery and finance classifications still open. Check that periods, GST bases and customer populations match before comparing values.
