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. Exceptions are made when a customer specifically requests that the vendor delay delivery and has a legitimate business reason for the request.

Alleged abuse by Nortel

Nortel Nortel Networks Corporation (Nortel), formerly Northern Telecom Limited, was a Canadian multinational telecommunications and data networking equipment manufacturer headquartered in Ottawa, Ontario, Canada. It was founded in Montreal, Quebec, ...

Networks Corporation was a multinational telecommunications equipment manufacturer headquartered in

Mississauga, Ontario Mississauga ( ), historically known as Toronto Township, is a city in the Canadian province of Ontario. It is situated on the shores of Lake Ontario in the Regional Municipality of Peel, adjoining the western border of Toronto. With a popul ...

, Canada. During and right after the optical boom years, Nortel allegedly used bill and hold transactions to inflate the company's revenues during some quarters, allowing company executives to earn millions in bonuses.

References

Accounting in the United States Ethically disputed business practices Accounting terminology Finance fraud Nortel {{Business-term-stub