Accrued Revenue: What It Is and How to Record It
Accrued revenue is income a company has earned but not yet billed or collected, recorded as an asset. Here is what accrued revenue is, the journal entries, examples, and how it differs from deferred revenue.
Sometimes a company earns revenue before it can bill for it, work delivered mid-contract, usage that accrues daily, a milestone reached before the invoice goes out. Accrued revenue is how accrual accounting captures that earned-but-unbilled income in the right period, as an asset, rather than waiting for the invoice or the cash. It is the revenue-side mirror of accrued expenses.
This guide explains what accrued revenue is, why it is an asset, how to record it, and how it differs from deferred revenue and accounts receivable.
What is accrued revenue?
Accrued revenue (also called unbilled revenue or accrued income) is revenue a company has earned by delivering goods or services but has not yet billed or collected. Under the revenue recognition principle, revenue is recognized when it is earned, not when cash arrives, so earned-but-unbilled revenue is recorded as an asset with an adjusting entry.
Accrued revenue is the opposite of deferred revenue. Deferred revenue is cash received before you deliver (a liability); accrued revenue is delivery before cash or billing (an asset). Both exist to match revenue to the period it was actually earned.
Why is accrued revenue an asset?
Because the company has earned the money and now has a right to collect it. That right, to be billed and paid for work already done, is a resource with future economic benefit, which is the definition of an asset. It typically sits on the balance sheet as "unbilled receivables" or "accrued revenue" until it is invoiced, at which point it becomes a normal account receivable.
The journal entries
Say a consulting firm has delivered $20,000 of work by month-end but will not invoice until next month.
At period-end (adjusting entry)
- Debit Accrued Revenue / Unbilled Receivables $20,000 (an asset)
- Credit Revenue $20,000 (income statement)
When the invoice is issued
- Debit Accounts Receivable $20,000
- Credit Accrued Revenue / Unbilled Receivables $20,000
The first entry recognizes the revenue in the period it was earned; the second reclassifies it from unbilled to a normal receivable when the invoice goes out. When the customer pays, you debit Cash and credit Accounts Receivable as usual.
Accrued revenue vs. deferred revenue vs. accounts receivable
| Earned? | Billed? | Balance sheet | |
|---|---|---|---|
| Accrued revenue | Yes | Not yet | Asset (unbilled) |
| Accounts receivable | Yes | Yes (invoiced) | Asset |
| Deferred revenue | Not yet | Paid in advance | Liability |
The progression is often accrued revenue → accounts receivable → cash: you earn it (accrue), then bill it (receivable), then collect it (cash). Deferred revenue runs the other way, cash first, delivery later. See our guide to deferred revenue.
Why accrued revenue matters
- Accurate period results. It recognizes revenue when earned, so income is not understated in the period the work was done.
- A complete balance sheet. Unbilled receivables show the full value the company is owed, not just invoiced amounts.
- Common in services and usage models. Long projects, milestone billing, and usage-based pricing routinely generate accrued revenue.
How AI agents help with accrued revenue
For businesses with milestone or usage-based billing, calculating accrued revenue each period is recurring, data-driven work: determine what was earned but not yet billed, calculate the amount from contracts and usage data, draft the adjusting entry, and reclassify it when invoiced. An AI agent can run that loop, pulling the data, computing the accrual, drafting the entries, and tying every figure back to the underlying contracts and usage, with a human approving.
This is part of the broader financial close automation pattern: agents handle the recurring recognition work, the accountant owns the policy and review.
Frequently asked questions
What is accrued revenue?
Accrued revenue is income a company has earned by delivering goods or services but has not yet billed or collected. It is recorded as an asset (unbilled receivables) with an adjusting entry, so the revenue lands in the period it was earned, per the revenue recognition principle.
Is accrued revenue an asset or a liability?
Accrued revenue is an asset. The company has earned the money and has a right to collect it, which is a resource with future economic benefit. It sits on the balance sheet as unbilled receivables until it is invoiced and becomes a normal account receivable.
What is the difference between accrued revenue and deferred revenue?
Accrued revenue is earned before it is billed or paid (an asset). Deferred revenue is paid before it is earned (a liability). They are mirror images: one is delivery ahead of cash, the other is cash ahead of delivery.
What is the difference between accrued revenue and accounts receivable?
Both are assets for earned revenue, but accrued revenue is earned and not yet invoiced (unbilled), while accounts receivable is earned and already invoiced. Accrued revenue typically becomes accounts receivable once the invoice is issued.
The bottom line
Accrued revenue records income you have earned but not yet billed, as an asset, so revenue is matched to the period it was actually earned. It is the mirror of deferred revenue and the first step in the earn-to-cash progression. It is common in services, milestone, and usage-based businesses, and it has to be calculated accurately every period.
If you want accrued revenue calculated, booked, and reclassified automatically each period with every number traceable to the contract, talk to our team.
