What is Accrued Revenues?
Accrued revenues are amounts a business has earned during the period by delivering goods or rendering services but has not yet invoiced or collected, recognized as receivables under the accrual basis of accounting.
How It Works
- Period-end entry: debit accrued revenue (or unbilled receivable), credit revenue.
- When invoiced: debit accounts receivable, credit accrued revenue.
- When collected: debit cash, credit accounts receivable.
- Common items: long-running consulting projects, professional services, recurring contracts.
Saudi Context
Saudi consultancies, software-as-a-service businesses, and construction contractors routinely accrue revenue for work completed but not yet invoiced. ZATCA’s e-invoicing rules require an actual e-invoice to be issued within 7 days of the chargeable event, so accrued revenues must be tightly tracked and converted into formal invoices to remain compliant.
Example
A Saudi consultancy completes SAR 40,000 of December work but invoices in early January. 31 December accrual: Dr Accrued Revenue 40,000, Cr Consulting Revenue 40,000. When invoiced 7 January: Dr Accounts Receivable 46,000 (including 15% VAT), Cr Accrued Revenue 40,000, Cr Output VAT 6,000.