If you’re like most business owners, you’re always looking for ways to improve your bottom line. One of the biggest debates in the business world is the importance of backlog vs bookings. While there’s no easy answer, it’s important to understand the pros and cons of each before making a decision.
A backlog represents potential revenue that has not yet been booked. This can help you forecast your future sales and determine if you can take on more work. However, a large backlog can also tie up working capital and create cash flow issues.
Bookings are actual revenue that has been invoiced or otherwise earned by your company. This number reflects the current demand for your products or services and can give you an idea of how well your marketing efforts are performing. However, bookings don’t necessarily reflect future demand since customers may not follow through with their purchase plans (which is why many businesses track both metrics).
Read more to learn more about backlog vs bookings and their impact on your SaaS business.
Backlog vs Bookings: What’s the Difference?
Backlog is the total value of all outstanding orders that a company has yet to fulfill. In contrast, bookings refer to the total value of all new sales that a company has booked or contracted for over a certain period.
Backlog can be a useful metric for assessing a company’s future sales growth potential since it represents the value of all sales that have been contracted but not yet fulfilled.
Bookings, on the other hand, provide a more immediate picture of a company’s sales performance.
Booking vs Billing vs Backlog
Booking, Backlog, and Billing (BBB) are three crucial pieces of information that you need to track.
Remember that they are closely linked, so analyzing them together will give you a more accurate picture of how your business is doing.
Sales reports can provide a lot of information that can help you understand and optimize your sales processes. Furthermore, making decisions based on data is usually more effective than guessing.
Booking, billing, and backlog information provide you with a comprehensive view of your organization from various angles. This allows you to plan well for the future and make necessary adjustments to your activities based on present market trends. By making use of this information, you will be optimally prepared for what is to come.
Having access to accurate, up-to-date business information is vital to the success of your business.
Most business leaders rely on outdated and inaccurate information, which leads to sub-optimal decision-making and poorer performance as a result.
But with BBB you’ll have a more comprehensive overview of your company. This can help you optimize your business processes in all areas of your organization, not just one or two. Having this insight will help make better business decisions for your entire company.
In this article, we’ll explain the differences between booking, billing, and backlog, and give you the know-how you need to master them.
Bookings – A Head Start for Your Business
Bookings are an essential part of any business. By having a report of expected sales, businesses can plan and arrange for these sales in advance. This gives them a head start and allows management to have a better understanding of what can be anticipated.
A sales booking is when a customer agrees to purchase something from your business. However, the sale is not finalized just yet.
With all of this information, you can analyze and quantify the orders that are coming in.
Bookings are a good indicator of how well your products are doing. This data can show you which products are doing well and which aren’t, which helps you make better decisions about what to stock up on and where to direct your marketing campaigns.
By tracking your marketing efforts, you will be able to determine which products are selling well and which need more attention.
Billings – What You Charge Your Client
Bookings and billing are two different terms. A booking is when a sales transaction has been completed, and this sale is then sent to a client or customer. An invoice is then generated.
Billings, or the amount of money you charge your clients, are directly linked to how much you earn.
Backlogs – Orders in the Pipeline
Having information on backlogs allows you to take action when there are problems with orders that have been placed but not fulfilled.
It’s important to note any changes in the backlog, as they’re usually the first sign of some change or shift in business.
As such, you need to act fast on analyzing your missed opportunities.
If your sales are increasing, this is likely a sign that your backlog of work is growing.
If your backlog of work decreases, it could indicate a problem with your sales. This may be due to a decrease in demand, a changing market, or problems with your suppliers. If this occurs, you should investigate the cause and take steps to correct it.
Booking vs Billing vs Backlog Metrics
As you can see, the BBB metrics can give you a lot of information about how your business is doing. You can use this information to figure out which products are bringing in the most revenue, for instance. This can help make decisions about what to do next with your business.
You will know if your sales team is hitting their sales goals, if orders are being delivered on time, and if your team is staying on track.
What other information can you gather from the BBB?
With information from the BBB, you can determine how much money is coming into your business, and how much you can safely spend.
Looking at your BBB data can give you a good idea of how your business is likely to fare in the future. By studying historical trends, you can get a sense of what might happen and plan accordingly.
It can help you gauge how well your processes are working, and whether you need more inventory for the coming fiscal year.
BBB also provides information based on the overall organization, rather than on individual departments.
This lets you respond to urgent matters or concerns much more quickly.
There’s no easy answer when it comes to deciding whether a backlog vs bookings is more important for your business. However, understanding the pros and cons of each can help you make an informed decision. If you’re focused on short-term cash flow, then bookings may be more important. However, if you’re looking to forecast future sales and capacity, then a backlog could give you a better picture. Ultimately, it’s up to you to decide which metric is most important for your business success!