Ask a consultancy what it billed last month and you will get an answer in a minute. Ask what it has been paid for that it has not yet delivered and you will get a pause, and then either a guess or a promise to come back to you.
That second number is deferred income, and it matters more than most firms treat it.
What it is
A consultancy invoices ahead of the work more often than it thinks. A deposit on a fixed-price build. A retainer billed at the start of the month. A milestone invoiced on the date rather than on completion. In each case cash arrives before the days are worked, and until they are, the firm owes the client the work.
Deferred income is the value of that owed work. It is a liability on the balance sheet and, more usefully, it is a measure of how much of the coming months is already spoken for.
Why it is hard to produce
To compute it for one project you need three things at a date: what has been invoiced, what the work is worth per day, and how many days have been delivered. The first is in the accounts package. The second is in the proposal, or in somebody's head as "the blended rate". The third is in the timesheets.
Bringing those together for one project is a spreadsheet. Bringing them together for forty projects every month is a job, and it is the job that slides when month-end is busy. So most firms compute it at year-end for the accountants, and run the rest of the year without it.
What you can do with it when you have it
Read it per project and it tells you which engagements are ahead of the cash and which are behind it. A fixed-price build with a large deposit and little delivered is a commitment; the same build with the deposit spent and the balance not yet invoiced is a risk. The number tells the two apart.
Read it in total and it tells you how much runway is already funded. A firm with two months of deferred income can lose a sale and survive the quarter. A firm with none is one bad month from the overdraft, however busy it looks.
Read it at a future date, against the resource plan, and it becomes a forecast: at the end of next quarter, given what is booked, how much will have been delivered against what has been invoiced? That is the question a board actually wants answered, and almost nobody can answer it.
How to make it a report instead of a project
The calculation is simple once the inputs live together. Take the revenue recognised against a project, convert it to time at the rate the budget was priced at, subtract the time used, and value what is left. For a date in the future, add the time the plan says will be used by then. Release it when the project completes and its last activity is behind it.
What makes it a report rather than a project is that the invoices, the budgeted rate, the timesheets and the plan are already the same records. Then deferred income is a page you open with a date picker on it, and the pause when the board asks goes away.
Bitmap computes deferred income per project and in total, at any date, from the invoices, budgets, timesheets and plan it already holds.