A bill and hold transaction occurs when a company recognizes revenue before delivery takes place. Normally a revenue is not recognizable until goods are delivered or services are rendered.[1] Exceptions are made when a customer specifically requests that the vendor delay delivery and has a legitimate business reason for the request.[citation needed][2]
Alleged abuse by Nortel
editNortel Networks Corporation was a multinational telecommunications equipment manufacturer headquartered in Mississauga, Ontario, Canada. During and right after the optical boom years, Nortel allegedly used bill and hold transactions[3] to inflate the company's revenues during some quarters, allowing company executives to earn millions in bonuses.
References
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