Key points
Unbilled revenue is revenue you have earned by delivering, but have not yet invoiced at the reporting date.
It is an asset, the opposite timing of deferred revenue, and is common for usage billed monthly in arrears.
If the only thing missing is the invoice, it is an unbilled receivable; if payment still depends on more performance, it is a contract asset.
For per-unit usage pricing, the right-to-invoice practical expedient in ASC 606-10-55-18 often lets revenue follow the metered amount.
The most common error is double counting when the billing system posts revenue again on the invoice date.
Unbilled revenue in one paragraph
Unbilled revenue is revenue you have earned by delivering goods or services, but have not yet invoiced at the end of a period. It sits on the balance sheet as an asset until the invoice goes out. It is the reverse of deferred revenue, where the customer pays before you deliver.
For usage-based companies, unbilled revenue is routine. A customer consumes in November, the meter closes on November 30, and the invoice goes out a few days later. November revenue still belongs in November.
Receivable or contract asset?
ASC 606 has no account called unbilled revenue. It splits the balance by one test: is anything other than time needed before the customer must pay?
Situation | ASC 606 classification | Typical account name |
|---|---|---|
Metered usage consumed, invoice pending | Receivable | Unbilled receivables |
Work done, payment depends on a later milestone or acceptance | Contract asset | Contract asset |
Hours worked under time and materials, billed next month | Receivable | Unbilled receivables |
PwC’s guide includes an example where an amount not yet invoiced is still a receivable because the right to payment is unconditional. Most usage billed in arrears follows that pattern. Some teams call the same balance accrued revenue.
The right-to-invoice practical expedient
ASC 606-10-55-18 lets you recognize revenue in the amount you have the right to invoice, when that amount corresponds directly to the value of your performance to date. IFRS 15 paragraph B16 has the same expedient. For a flat price per API call or per token, revenue then equals metered usage times price.
It has limits. PwC’s summary of the revenue TRG discussion notes that rates can change over the term if the changes reflect value to the customer. It also notes that large upfront fees or front- or back-loaded payment schedules can stop the expedient from applying. Tiered discounts and minimum commitments need a closer look.
Worked example: November usage billed in December
Illustrative only. Fieldnote AI is a fictional Series B company with usage-based pricing. A customer pays $0.005 per API call, billed monthly in arrears with net-30 terms. In November the customer makes 4,000,000 calls, so Fieldnote has earned $20,000.
November 30, close. Usage is pulled from the usage database and priced.
Account | Debit | Credit |
|---|---|---|
Unbilled receivables | $20,000 | |
Usage revenue | $20,000 |
December 3, invoice issued. The invoice reclassifies the balance. It does not create new revenue.
Account | Debit | Credit |
|---|---|---|
Accounts receivable | $20,000 | |
Unbilled receivables | $20,000 |
January 2, cash received.
Account | Debit | Credit |
|---|---|---|
Cash | $20,000 | |
Accounts receivable | $20,000 |
Common mistakes at close and audit
Double counting. Many billing integrations post debit receivable, credit revenue on the invoice date. If you also accrued at month-end, revenue is counted twice. The invoice must clear the unbilled balance instead.
Late usage data. Events that arrive after the close cutoff get pushed into the next month. Set a cutoff window, estimate the tail, and true it up.
Billing-system revenue reports. Invoice dates are not delivery dates. Revenue by invoice month misstates every month that usage and billing straddle.
Stale balances. Unbilled amounts older than one billing cycle usually mean a failed invoice, a disputed rate or leakage. See revenue leakage.
Month-end checklist
Pull consumption by customer for the period from the usage database, not the billing tool.
Price it with each contract’s current rate card, including tiers and minimums.
Post one accrual entry by customer to unbilled receivables.
Confirm the billing system reclassifies on invoice rather than posting revenue again.
Age the unbilled balance and investigate anything older than one billing cycle.
Document whether the right-to-invoice expedient applies to each pricing model.
How Quanta handles it
Quanta builds integrations into the customer’s usage database and Stripe, so the month-end accrual comes from consumption and the invoice clears it. Quanta’s in-house accounting team keeps the ledger, and each unbilled balance traces back to the journal entries behind it.
Quanta perspective
For usage-based companies, unbilled revenue is often the largest judgment in the monthly close, yet it is usually built in a spreadsheet from a billing export. It should come from the usage database, priced at contract rates, because that is also the data that tells you gross margin per customer.
Frequently asked questions
Is unbilled revenue an asset or a liability?
An asset. You have earned the revenue and expect to be paid, but have not yet sent the invoice.
What is the difference between unbilled revenue and deferred revenue?
They are opposite timing. Unbilled revenue is delivery before billing, an asset. Deferred revenue is billing or payment before delivery, a liability.
Is unbilled revenue the same as accrued revenue?
Usually, yes. Both describe revenue earned but not yet invoiced. Under ASC 606 the balance is either a receivable or a contract asset depending on whether payment is conditional.
Is unbilled revenue included in accounts receivable?
When the right to payment is unconditional, it is a receivable, often shown as unbilled receivables within or next to accounts receivable. Conditional amounts are contract assets and are presented separately.
How long should revenue stay unbilled?
Normally no longer than one billing cycle. Older balances usually point to failed invoices, disputes or pricing errors.