I need a help to understand unbilled revenue. In my current organisation in so many projects we did a early benefit realisation billing schedule. Saving Changes...
Not sure I understand what you are asking for, Abhishek? To understand unbilled revenue, wouldn't you just look at the approved revenue for work completed and compare that with what your finance people have billed the client?
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
Abhishek
Before invoices are actually issued to client, it can’t be considered revenue. In theory, it is potential revenue but in reality, it is not until it is paid as the client might refuse to pay for any reason.
Effort spent and to be invoice is usually put in a separate column showing effort spent, amount to be invoices and invoicing future month.
Booking revenue before it is actually realized includes risk that the revenue will not be captured.
When I work cost reduction projects, the NPV is estimated over a period of time determined by Finance. The projects go through a gated process, and once a certain maturity level is reached, Finance will include the savings in the future budget planning.
From that point, the situation might change (such as COVID impacts changing the entire money flow) and the actual savings will not match the original estimate. This must be considered a risk that the financial plan does not accurately reflect the future money flow (revenue or cost savings). Eventually, the planned cost or revenue must be validated against the actuals, and the financial plan updated to reflect the real money flow, rather than the expected money flow. Saving Changes...
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