How Contracted Revenue Can Support Working Capital

Creative businesses often secure revenue before they receive cash.

A brand may sign a campaign agreement. A client may issue a purchase order. A media company may confirm a sponsorship. A production company may sign a statement of work.

The payment may not arrive for weeks or months, but the revenue expectation can still matter.

What is contracted revenue?

Contracted revenue is revenue supported by a signed agreement or commitment.

It may include:

• Signed campaign agreements
• Purchase orders
• Statements of work
• Sponsorship contracts
• Production agreements
• Media or advertising agreements
• Retainer contracts
• Licensing agreements

Contracted revenue is not the same as collected cash. But it may help support a financing review.

Why contracted revenue matters

Contracted revenue can show:

• A customer has committed to pay
• The amount may be defined
• Payment terms may be documented
• Work may be scheduled or underway
• The business has expected future cash flow

This can be useful when a business needs capital before the invoice is collected.

Contracted revenue vs. invoiced revenue

Invoiced revenue usually means the business has issued an invoice for work that has been completed or reached a billing milestone.

Contracted revenue may exist before an invoice is issued.

Both can be relevant, but they are evaluated differently.

A lender will generally want to understand whether the revenue has been earned, whether performance obligations remain, and whether the customer can cancel or dispute payment.

What lenders may review

For contracted revenue, lenders may review:

• Signed contract
• Purchase order
• Statement of work
• Scope of services
• Payment schedule
• Cancellation rights
• Performance obligations
• Customer quality
• Expected invoice date
• Expected payment date

When contracted revenue may support funding

Contracted revenue may support working capital when:

• The contract is signed
• The customer is creditworthy
• Payment terms are clear
• Work is underway or scheduled
• The business has a history of successful delivery
• There is limited cancellation or dispute risk