What Is Unbilled Revenue?
Work finishes on one date and the invoice goes out on another, and the gap between them has a name.
Unbilled revenue is income a business has earned but not yet invoiced. The service was delivered or the goods were handed over, so the revenue belongs in this period’s books, but no invoice exists for the customer to pay against.
Ind AS companies present it as a contract asset, becoming a receivable once the right to payment turns unconditional. Companies on AS 9 just carry it as unbilled revenue. Either way a second clock runs alongside the accounting one, and for services it runs just thirty days.
Why Unbilled Revenue Builds Up
It is rarely carelessness. Four ordinary situations create it:
- Milestone billing. Work done past the last milestone sits unbilled until the next one clears.
- Month-end cutoff. Service runs to the 31st but the numbers are only compiled the following week.
- Sign-off delays. The customer’s engineer must certify the work before anyone can bill it.
- Retention. Part of the contract value is held back and billed on completion.
Each is legitimate on its own. The problem is letting the balance age quietly in the background, the way an outstanding invoice does, except that nobody in the business is chasing this one, because the customer has never actually seen a bill for it.
Difference Between Unbilled and Deferred Revenue
They sit on opposite sides of the balance sheet, the fastest way to tell them apart.
| Aspect | Unbilled revenue | Deferred revenue |
|---|---|---|
| Status | Earned, not billed | Billed or paid, not earned |
| Sheet | Asset | Liability |
| Money | Nothing in yet | Often collected upfront |
| Owed | Customer owes you | You owe the customer |
| Clears | When you raise the invoice | When you deliver |
Deferred revenue is an advance you work off. Unbilled revenue is work you must bill for. Confusing them misstates the period twice, in revenue and on the balance sheet.
Unbilled Revenue Example
An invented maintenance contract: a facilities firm in Chakan, Pune, servicing three factory units at Rs.1,84,500 a month, billed in arrears after the client signs off.
June’s work finished on the 30th. Sign-off came on 18 July, the invoice on the 20th.
| Date | Entry | Dr (Rs.) | Cr (Rs.) |
|---|---|---|---|
| 30 June | Unbilled revenue | 1,84,500 | |
| 30 June | Service revenue | 1,84,500 | |
| 20 July | Accounts receivable | 2,17,710 | |
| 20 July | Unbilled revenue | 1,84,500 | |
| 20 July | GST payable at 18% | 33,210 |
Note: this is an invented example for illustration only. The firm, the contract and every figure are made up.
The 30 June entry keeps June honest. The July entry retires the balance into accounts receivable, where it can be chased. Both halves are ordinary journal entry work.
The 30-Day GST Clock on Unbilled Revenue
This is the part that catches Indian businesses out, and it is not bookkeeping.
Rule 47 of the CGST Rules requires a tax invoice for services within thirty days of supply, stretched to forty five days for an insurer, bank, financial institution or NBFC. Miss that window and section 13(2) moves the time of supply back to the date of provision, or of payment if earlier, so the tax was payable then, not when the invoice appears.
The invoice above went out on 20 July, inside the window, so GST falls in the July return. Drag sign-off to August and the liability belongs to June, a return already filed.
Two branches worth holding. The thirty-day limit covers services; goods run on section 31(1), invoiced before or at removal, or at delivery where nothing moves. And a long-unbilled balance shows up as a books-versus-GSTR-1 gap at GST return filing, where auditors find it.
Clear Unbilled Revenue Before Day Thirty
The remedy is unglamorous: raise the invoice while the month is fresh, not at the end of a cycle nobody watches.
For retail and services businesses, Petpooja Invoice handles raising and tracking together: GST on every invoice, e-invoice generation, real-time GST liability and bookkeeping with P&L statements.
The pattern we see at Petpooja, across the businesses we work with: unbilled balances pile up wherever billing waits for a monthly cycle.
Run a line through this GST calculator first, and this walk-through of billing to GST filing covers the discipline behind a clean accrual.
Frequently Asked Questions
An asset. The work is done and the money is owed to you, so it sits on the asset side, shown as a contract asset by Ind AS companies until the right to payment turns unconditional.
Debit unbilled revenue and credit revenue when the service is delivered. On invoicing, debit accounts receivable and credit unbilled revenue, with GST credited to the tax payable account.
Not quite. A receivable exists once an invoice has been raised and only time stands between you and payment; unbilled revenue has no invoice behind it yet.
Eventually yes, and possibly sooner than you expect. If a service invoice is not issued within thirty days, section 13(2) treats the date of provision as the time of supply, so tax was due then.
Shorten the gap between delivery and billing. Weekly invoicing, sign-off deadlines in the contract, and a month-end review of anything delivered but unbilled clear most of it.
