Contract assets (unbilled revenue)
What are contract assets, and why does a lender read them differently from debtors?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
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A contract asset is revenue a business has earned by performing work but has no unconditional right yet to be paid for, because payment still depends on something more than the passage of time, such as reaching the next milestone. IFRS 15 shows it separately from receivables; other accounts may call it accrued income, unbilled revenue or work in progress. A lender reads it as softer than a debtor: there is no invoice to finance or chase, the amount rests on the business's own estimate of progress, and a balance growing faster than revenue can mean work the customer has not accepted or revenue recognised ahead of the cash.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
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