Bill-and-Hold
Definition
An arrangement where title passes and revenue is recorded even though the seller retains physical possession of the goods at the buyer's request. Legitimate versions require strict conditions; fraudulent versions fabricate those conditions.
- Definition
- Revenue recorded before physical delivery
- Legitimate use
- Requires strict qualifying conditions
- Fraud risk
- Fabricated buyer request or conditions
- Audit area
- Revenue recognition fraud
Common questions
What conditions make a bill-and-hold sale legitimate rather than fraudulent?+
The arrangement must be at the genuine request of the buyer, the goods must be complete, identified, and ready for shipment, and delivery must be scheduled for a fixed, reasonable future date rather than left open-ended.
What is the typical fraud pattern investigators look for?+
A seller recording revenue on goods that never actually ship, or shipping without a genuine buyer request, often to inflate a quarter's reported sales, with paperwork for buyer consent created or backdated after the fact.
Related terms
- Bill-and-Hold Arrangement
- A transaction in which a seller invoices a customer for goods that remain physically on the seller's premises at the customer's request....
- Channel Stuffing
- A scheme in which a company ships excess inventory to distributors or retailers near a reporting period's end to record revenue, knowing...
- Days Sales Outstanding (DSO)
- A ratio measuring how long, on average, a company takes to collect payment after a sale: (accounts receivable / revenue) x 365....
- Fictitious Revenue
- Revenue recorded for a transaction that did not occur at all, or that involved a related party cycling funds to simulate customer...
- IFRS 15 / ASC 606
- The converged international (IFRS 15) and US (ASC 606) standards that replaced predecessor revenue rules from 2018. Both apply a five-step model:...
- Performance Obligation
- Under IFRS 15 and ASC 606, the distinct promise to transfer a good or service to a customer. Revenue can only be...
- Premature Revenue Recognition
- Recording revenue in an earlier period than the standards permit, typically by treating an uncompleted performance obligation as satisfied. The transaction is...
- Round-Tripping
- A circular transaction in which cash or assets flow between two or more related parties so that each records revenue without any...
- Side Letter
- An informal or undisclosed written agreement between a buyer and seller that modifies the terms of the primary contract. Side letters are...