Unbilled receivable
An unbilled receivable is revenue recognised for which the entity's right to consideration is already unconditional, with only the passage of time required before payment, but no invoice has been issued yet. Unlike a contract asset, it is a receivable and is presented with accounts receivable.
Standard references
- ASC 606606-10-45-4
- IFRS 15paragraph 108
- Ind AS 115paragraph 108
Worked example
Illustrative: usage fees are earned monthly but invoiced quarterly in arrears. January usage is $8,000 and no further performance is needed to earn it.
- 31 January: Dr Unbilled receivable $8,000 / Cr Revenue $8,000.
- 31 March, invoice issued: Dr Accounts receivable $8,000 / Cr Unbilled receivable $8,000 (with February and March usage handled the same way).
Result: Revenue lands in January; the receivable is simply reclassified when the invoice goes out.
Illustrative figures for explanation only, not taken from a real contract.
Common mistakes
- Calling a right that still depends on future performance an unbilled receivable; that is a contract asset.
- Leaving unbilled balances out of receivables ageing and credit-loss analysis.
- Forgetting to reclassify to billed receivables when the invoice is issued.