Cash flow is a measure of dollars coming into your business, while recurring revenue allows you to measure and track the value of your subscriptions.
Recurring revenue will not include money paid to you from one time purchases. This one-off revenue will be accounted for in your cash flow.
For an example of how these two metrics differ, let’s look at how an annual subscription is treated for both cash flow and monthly recurring revenue purposes.
Let’s say your customer purchases an annual subscription for $120. The customer pays you this $120 upfront at the point of purchase, and your cash flow reflects this influx of $120 in the month of purchase. For the purposes of monthly recurring revenue, the $120 subscription is divided by the 12 month subscription term; this means that each month, the customer contributes $10 of monthly recurring revenue to your business.