Bill and Hold

Bill and hold transaction is important transaction which can inflate the income of any businessman who sell goods to his customer. So, you should understand what is this. Bill and hold is that business transaction in which customer buys goods or service  from his vendor. Seller gets its price and under agreement, he does not deliver the goods to the customer.

Received amount is also not advance but under bill and hold agreement. For example, Mr. A bought goods from Mr. B Company of $ 10,000. They have agreed Mr. B company will send delivery of $ 10,000 goods to Mr. A in the beginning of next year. Now, This advance $ 10,000 is not liability but it is the revenue of Seller under agreement. Seller can do same bill and hold agreement with other 10 parties and inflate his revenue in his income statement. Buyer will also not show it as asset. But sometime, if both parties wants to show it in financial statement. It will like

Income statement of Vendor $ 10000 as revenue.

Balance sheet of Vendor $ 10,000 as liability of sending goods or service.

Off-balance sheet of Vendor : $10,000 as asset of stock in hand without delivery which he can use to sell other and inflate his earning upto $ 10,000.

Income statement of Buyer :  $ 10,000 as Expense of buying goods or service

Balance sheet of Buyer :  $ 10,000 as Asset of Receivable Goods or Service
Practical Example : Nortel Networks Corporation of Canada has done such agreement in the form of vendor and inflate his revenue millions of dollars.