Course · Act II: Due Diligence · Chapter 7
Revenue recognition fraud
How sales get pulled into the wrong year with bill-and-hold and channel stuffing, why rising DSO gives it away, and why reversing them costs EBITDA the margin, not the revenue.
Key terms
- Revenue recognition
- The rules for when a sale counts as revenue: when the customer gets control of the goods or service, not when the invoice goes out.
- Bill-and-hold
- Billing a customer for goods the seller keeps in its own warehouse. Legitimate only when the customer asked for it, for its own reasons.
- Channel stuffing
- Pushing distributors to take more stock than they can sell, often with discounts or return rights, to pull sales into this period.
“Revenue That Isn’t” is part of the full course: 6 puzzles on revenue recognition fraud. Biscuit Barrel is fictional; the frauds in the notes are real, settled cases. Try this act’s free chapter, “Adjusted EBITDA”, first.
“Revenue That Isn’t” is in Act II: Due Diligence. 6 puzzles, unlimited retries.
Go to chapter →