What is Accrued Revenue?
Nexa Consultancy | Startup & Finance Glossary
Accrued Revenue is revenue that a company has earned by providing goods or services, but for which it has not yet billed the customer or received payment. It is recorded as a current asset (a type of receivable) on the balance sheet to reflect the money the company is entitled to receive.
For Startups: This is common in service-based startups or those working on long-term projects. If a project milestone is completed at the end of a month but the invoice is only sent in the next month, the revenue for that milestone must be "accrued" in the current month to accurately reflect the company's performance.
Example: A consulting startup completes a phase of a project worth ₹2 Lakhs in March. They will bill the client in April. They must record ₹2 Lakhs as accrued revenue in their March financial statements to show it was earned in that period.