Three balance-sheet creatures track the timing gap between performance, billing, and cash. Pin each one down carefully, once:
- Receivable: an unconditional right to consideration. Only the passage of time stands between you and the cash, because the invoice is raised and the credit period is running.
- Contract asset ("unbilled revenue" in Indian ARs): revenue earned by performance, where the right to bill is still conditional on something other than time, such as the next milestone or final acceptance. It carries two risks: credit risk and performance/dispute risk. Under both IFRS 9/Ind AS 109 and CECL, contract assets take ECL allowances just like receivables.
- Contract liability ("deferred revenue", "unearned revenue", "income received in advance"): cash or an unconditional billing received before performance. You settle it by doing the work, and no cash goes back.
What do these balances look like at real companies?
Some real-world anchors help here (all figures illustrative, modeled on ~FY24/FY25 scale; pull the actual filings). Infosys discloses unbilled revenue of roughly ₹15,000 crore. It splits that into contract assets, which are fixed-price and milestone-conditional, and financial assets/unbilled receivables. That second group is T&M work where the right is unconditional and only the invoice is pending. On the other side Infosys carries unearned revenue of roughly ₹7,500 crore. Costco's deferred membership fees (about $2.4bn) are the textbook contract liability. Costco collects the fee upfront and recognizes it ratably over the 12-month membership. Salesforce reports remaining performance obligations (RPO) of about $60bn, of which about $30bn is current. RPO is total contracted future revenue not yet recognized. The 606/115 regime made it a standard disclosure, and for SaaS, analysts now watch it more closely than reported revenue.
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What should an analyst read into them?
Now look at all this as an analyst. Deferred revenue is a good liability. It's customers financing the business, and it's one reason quality SaaS and subscription businesses run negative working capital. Its growth is a leading indicator. Billings ≈ revenue + Δdeferred revenue, so when deferred-revenue growth slows, it flags demand weakness before the P&L shows anything. The mirror case is contract assets ballooning faster than revenue. That means the company is recognizing ahead of its right to bill. Sometimes it's a legitimate mix shift. Sometimes it's aggressive cost-to-cost estimates, a Schilit staple you'll meet again with earnings games. One merger footnote is worth keeping for later. Acquirers historically wrote acquired deferred revenue down to fair value (the "haircut"), which depressed post-deal revenue. US GAAP removed the haircut from 2023 (ASU 2021-08), while IFRS/Ind AS still fair-value it. File that away until you reach the equity module.
Where do you find them in the filings?
In the filings, start with the revenue note. All three standards mandate its disaggregation by segment/geography/timing. Then read the contract-balances note. It gives opening/closing contract assets and liabilities plus the revenue recognized out of opening deferred revenue. Then RPO. In India, if these aren't presented separately, Schedule III shows them as "Other current liabilities: income received in advance" and "Other financial assets: unbilled revenue".