Revenue realization / Realized revenues
Encyclopedia of Business Terms and Methods, ISBN 978-1-929500-10-9. Copyright © 2011. Marty J.Schmidt.
For companies that use accrual accounting, revenues from sales of goods and services are said to be realized by the seller only when there is good reason to believe payment will be received.
Realization is one of the two conditions required in order for the seller to recognize incoming revenues in an income statement acccount, such as "sales revenues". The other requirement is that the seller has in fact delivered the goods and services (i.e., the seller has earned the revenues).
If the seller has not yet received payment for goods and services delivered, and if there is doubt that the buyer will pay, normally the seller will still attempt to persuade the buyer to pay, for some period of time (e.g., up to 90 days or 120 days after due date). If payment is still not received, and there is no reason to believe it will be received, the seller may formally recognize that the funds are not realizable by write them off as a bad debt expenses.
See the encyclopedia entry unearned revenues for more on the booking transactdions and accounting reporting of of unearned and unrealized revenues.
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