This free, guided checker walks your finance team through the key decision points for IFRS 15 Bill-and-Hold Arrangements. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
Bill-and-hold arises when a customer is invoiced for goods that remain in the seller's custody until a later delivery date requested by the customer. Scan the order-to-cash cycle for invoices issued materially before shipment and for warehousing or storage clauses in sales contracts. Quarter-end invoicing ahead of scheduled shipments is the classic pattern that pulls a contract into IFRS 15.B79.
Apply the point-in-time control indicators in IFRS 15.38 and recognize revenue at shipment, delivery, or acceptance; the bill-and-hold guidance in IFRS 15.B79-B82 does not apply.
Official guidance: IFRS issued standards
IFRS 15.B81(a) requires a substantive reason such as lack of storage, production scheduling, or logistics constraints rather than seller convenience alone. Look for the customer's own words - a purchase order clause, email, or storage instruction - showing the customer asked to delay delivery for its business needs. Seller-initiated early billing to accelerate revenue is the common misapplication this criterion is designed to block.
Defer revenue until physical delivery because the reason for the bill-and-hold arrangement is not substantive under IFRS 15.B81(a).
Official guidance: IFRS issued standards
IFRS 15.B81(b) requires the product to be identified separately as belonging to the customer, typically through physical segregation, serialized tagging, or warehouse-system flags that remove the units from available-to-promise stock. Walk the warehouse records: if the same units could be picked for another order, the criterion fails. Book-only earmarking with no operational segregation is the common misapplication.
Segregate and identify the customer's goods; until IFRS 15.B81(b) is satisfied, revenue is deferred and the units remain in the seller's inventory.
Official guidance: IFRS issued standards
Work-in-progress or goods awaiting final inspection do not meet bill-and-hold readiness until the seller could deliver immediately if requested. Tie the assessment to quality release documentation and packing status for the specific earmarked units, not to overall production capacity. Billing on completion of manufacturing but before final inspection is a frequent trap under IFRS 15.B81(c).
Defer revenue until the product is complete and currently ready for physical transfer as required by IFRS 15.B81(c).
Official guidance: IFRS issued standards
Control indicators include legal title, physical possession, risks and rewards, customer acceptance, and present right to payment under paragraph 38. In a bill-and-hold, physical possession stays with the seller, so IFRS 15.B80 directs the analysis back to paragraph 38 plus the four B81 criteria; weigh the remaining indicators collectively rather than requiring all of them. Evaluate the customer's assessment too - the customer must be able to sell, pledge, or redirect the goods for control to have passed.
Defer revenue until the customer obtains control under the IFRS 15.33 definition, evaluated with the IFRS 15.38 indicators as required for bill-and-hold by IFRS 15.B80.
Official guidance: IFRS issued standards
IFRS 15.B79 describes the customer requesting the arrangement, for example because it lacks space or its production schedule is delayed, and IFRS 15.B81(a) makes a substantive reason a recognition precondition. Collect the request in writing - a purchase order term, storage instruction, or delivery schedule signed before period end. Verbal understandings assembled after year end are weak evidence and a recurring audit finding.
Defer revenue; without a documented customer delivery request the bill-and-hold reason is unlikely to be substantive under IFRS 15.B81(a).
Official guidance: IFRS issued standards
IFRS 15.B81(d) requires that the entity cannot have the ability to use the product or to direct it to another customer. Test both the contract language and warehouse practice: a substitution right, or a history of borrowing held units to fill urgent orders, defeats the criterion even if the contract is silent. Fungible commodity stock held in a common pool rarely passes this test.
Defer revenue while the entity retains the ability to use the goods or direct them to another customer, failing IFRS 15.B81(d).
Official guidance: IFRS issued standards
Retained risks such as obsolescence, theft, or damage may indicate control has not transferred despite billing. Read the contract's risk-of-loss and insurance clauses for the storage period and confirm who bears price and inventory risk while the goods are held. Risks and rewards is one indicator in IFRS 15.38(d), so weigh it together with title, right to payment, and acceptance rather than treating it as decisive alone.
Defer revenue; retained significant risks and rewards of ownership indicate control has not transferred under IFRS 15.38(d).
Official guidance: IFRS issued standards
All bill-and-hold criteria must be satisfied simultaneously before revenue is recognized at the billing date rather than the delivery date. Document each of the four IFRS 15.B81 criteria with contemporaneous evidence as of the recognition date, not with facts assembled later. If any single criterion fails, revenue waits for delivery even though the other three are met.
Recognize revenue at physical delivery under IFRS 15.38; billings before delivery remain contract liabilities under IFRS 15.106 until control transfers.
Official guidance: IFRS issued standards
Bill-and-hold revenue recognition derecognizes inventory and may affect contract liabilities if billing preceded satisfaction. Reconcile the revenue posting, the IAS 2.34 cost-of-sales entry, and the contract liability rollforward to the same control-transfer date. A mismatch between the invoice date, the recognition date, and the inventory relief date is the usual sign the entries are incomplete.
Post the IAS 2.34 inventory derecognition and the IFRS 15.105-107 contract balance entries before closing the period.
Official guidance: IFRS issued standards
Holding services after control transfer may be a separate performance obligation recognized over the storage period. IFRS 15.B82 requires an entity that recognizes bill-and-hold revenue to consider whether it has remaining obligations, such as custodial services, and to allocate part of the transaction price to them under IFRS 15.73-86. Free storage is not automatically immaterial - assess it whenever holding periods are long or storage has standalone value.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
Disclose significant judgments on timing of control transfer and bill-and-hold arrangements when material to users. IFRS 15.119(a) specifically names bill-and-hold when describing when performance obligations are satisfied, and IFRS 15.123 requires disclosure of the judgments that significantly affect timing. Quantify contract liability movements from early billing in the IFRS 15.116 contract balance disclosures.
Recognize bill-and-hold revenue; all IFRS 15.B81 criteria are met and the IFRS 15.119(a) and IFRS 15.123 disclosures are prepared. Complete the IFRS 15.119(a) and IFRS 15.123 disclosure analysis before finalizing bill-and-hold revenue reporting.
Official guidance: IFRS issued standards
Send us your situation and one of our senior CPAs will review it with you - fixed fee, no surprises.
Contact Us