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Bill and Hold in Accounting

>> February 13, 2012

Meaning of Bill and Hold in Accounting

As per accrual rule of revenue recognition, we add new revenue in our total revenue when we send goods or service are provided but there are lots of its exceptions. One of important exception is bill and hold. If customer need not his bought products at a time due to delay of its management, he requests to delay the delivery of these products. At that time company records these sold product in his sales account. It means, these transaction will be the recognize as revenue of company. So, this transaction will become bill and hold in accounting. For safe side, company gets cash money from this type of transaction which treated as normal cash sales transaction.

Important Point:

1. If there is big cost of transaction and buyer did not pay any advance payment for buying in later date. It is on the seller whether he will sell to them or not. At that time, it will not revenue recognition. For example, a person wants to buy 100X100 square feet  land of Rs. 1 Crore. So, he says that he will same within next three months. There is not any written agreement of this future contract. In next three month, same land becomes of Rs. 2 Crore and property dealer sells to other party by written agreement and gets Rs. 50 Lakh advance and balance in next week. Next month, property dealer gets all amount. Land is transferred to that second person. But second person has no time to make building on it. So, he request to property dealer to care his land. So, this transaction will be bill and hold.  

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