What is unbilled revenue (unbilled WIP)?
Unbilled revenue is work a contractor has done and recognised as revenue but has not yet been able to invoice, because the contract makes billing conditional on measurement or certification rather than on time passing.
Also called unbilled WIP, contract asset, work in progress.
Last reviewed
Unbilled revenue in plain words
Under Ind AS 115 it is a contract asset: the entity has performed, but its right to payment is conditional on something other than the passage of time. Once the bill is raised and only time stands between it and payment, the same amount becomes a receivable.
How is unbilled revenue calculated?
contract asset = revenue recognised to date - amounts billed to date
Read it per project. Netted across a portfolio, a project that is badly behind on billing is hidden by one that is ahead.
Why does unbilled revenue matter?
It is the part of the receivable that standard DSO cannot see, because no invoice exists yet. On an EPC project it is often the largest single pool of trapped cash and the one least discussed.
Where does unbilled revenue mislead?
A growing unbilled balance can mean the site is ahead of the billing team, or that measurement is stuck, or that revenue has been recognised on work the client will dispute. The number alone does not say which, and the three have very different consequences.
What do people get wrong about unbilled revenue?
- Leaving it out of the cash cycle
- Working capital that starts at the invoice ignores every day between doing the work and being allowed to bill it, which on a project is usually the longer half.
- Netting it against billings in excess
- A portfolio view that nets contract assets against contract liabilities can show a healthy total while one project has not billed for a quarter.
How does Crestline measure unbilled revenue?
Crestline measures the time between execution and certification directly, so an unbilled balance is explained by the step it is waiting at rather than reported as a total.
The working-capital lens