What is meant by bookings?
Bookings are the value of contracts customers sign in a period, whether or not the work has been done or billed. A booking is a commitment: it says future revenue is coming once the company delivers. A three-year service agreement signed today counts as a booking now, then turns into invoices and revenue over its term.
Why it matters to a revenue leader
Bookings are the cleanest measure of what the sales team produced in a period, which is why many compensation plans pay on them. They are also easy to inflate: signed scope the customer later cuts, renewals counted as new business, or multi-year totals that overstate one year of value. In a PE-backed services company, the sponsor will compare bookings with backlog and revenue to judge whether growth is real. Write down what counts as a booking and hold every branch to the same definition.
Example
Fictitious numbersA mechanical services company signs a three-year maintenance agreement worth $90,000 a year and a $250,000 chiller replacement in June. June bookings are $520,000 if the agreement is counted at full contract value. Revenue in June is close to zero, because the chiller job starts in August and the first maintenance visit is in July.
"Do we count multi-year agreements at full contract value or at one year, and does every branch count them the same way?"