Definition:

Bookings refer to the amount a customer pre-pays for a service or product from your company.

Example:

A customer pays $120 for an annual subscription. The $120 will be recorded as bookings (pre-payment for services) and as cash received, but only $10 per month will be recognized as revenue over the next year, as we only record revenue when products or services are delivered.

Why it matters:

Persuading clients to pay for services in advance helps reduce the cash you need to raise to fund operations.

Investors are interested in bookings, as these are not visible in the P&L (owing to revenue being recognised over time), so bookings provides a good indication of guaranteed future revenues.