DEFINITION of 'Deferred Billing'

The act of charging buyers for their purchases, without interest, at a later date. Deferred billing is most often used as a sales promotion technique, enticing potential customers to purchase big-ticket items now rather than later. Car dealerships and those that operate in the "luxury" markets usually offer deferred billing.

BREAKING DOWN 'Deferred Billing'

From a retailer's standpoint, deferred billing not only increases the buying power of a new or existing customer, it also gives that buyer time to realize they "can't live without" the product purchased. Deferred billing can affect a company's income statement and balance due to revenue recognition differences.

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RELATED FAQS
  1. What are some examples of deferred revenue becoming earned revenue?

    Understand specific examples when a company's deferred revenue is converted to earned revenue, and learn the principles behind ... Read Answer >>
  2. What types of companies tend to have the most deferred revenue?

    Learn what types of companies tend to have the highest levels of deferred revenue. Understand when deferred revenue is recognized ... Read Answer >>
  3. Who is eligible to hold a deferred tax asset?

    Find out when U.S. companies are allowed to hold deferred tax assets and report them in the financial statements according ... Read Answer >>
  4. How does a company derecognize a deferred tax liability?

    Learn about how deferred tax liabilities arise, when they must be reported in the financial statements, and how a company ... Read Answer >>
  5. How is a deferred tax asset taxed?

    Find out how the IRS and FASB treat deferred tax assets, which a company can recognize in order to reduce its future tax ... Read Answer >>
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    Learn deferred revenue and its treatment under accrual accounting and why various revenue recognition methods result in different ... Read Answer >>
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