Bill And Hold

AAA

DEFINITION of 'Bill And Hold'

A form of sales arrangement in which a seller of a good bills a customer for products but does not ship the product until a later date. In order for a transfer of ownership to occur, certain conditions must be met. These conditions include: payment for the goods, that the goods be segregated from all other similar goods by the seller, and that the goods be finished and ready for use.

This is also referred to as "bill in place".

INVESTOPEDIA EXPLAINS 'Bill And Hold'

The bill and hold arrangement may be beneficial for the parties involved, but great care must be taken by both parties to ensure that all of the criteria are met. If the arrangement does not meet all of the stated criteria, there will be no transfer of ownership. This means that revenue can't be recognized by the seller, and no assets or inventory can be recorded by the buyer related to this transaction.

There have been many scandals surrounding a bill and hold arrangement, and care must be taken when analyzing this type of arrangement.

RELATED TERMS
  1. Accrual Accounting

    An accounting method that measures the performance and position ...
  2. Cook The Books

    A buzzword describing fraudulent activities performed by corporations ...
  3. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  4. Revenue

    The amount of money that a company actually receives during a ...
  5. Revenue Recognition

    An accounting principle under generally accepted accounting principles ...
  6. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
Related Articles
  1. Earnings: Quality Means Everything
    Investing

    Earnings: Quality Means Everything

  2. Top 8 Ways Companies Cook The Books
    Personal Finance

    Top 8 Ways Companies Cook The Books

  3. When should a company recognize revenues ...
    Investing

    When should a company recognize revenues ...

  4. Advanced Financial Statement Analysis
    Options & Futures

    Advanced Financial Statement Analysis

comments powered by Disqus
Hot Definitions
  1. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  2. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  3. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  4. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  5. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  6. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
Trading Center