Completed Contract Method
The completed contract method of accounting recognizes all revenue when the contract is completed and the invoice is paid.
When to use the completed contract method
The completed contract method defers all revenue and expense recognition until the contract is completed.
This method is commonly used for projects where final costs and timelines are difficult to estimate. It's often used for larger engineering projects where the initial scope is difficult to determine.
tip
Talk to your accountant or tax advisor!
Your accountant or tax advisor is your best resource for determining how your business should be recognizing revenue.
Example
Let's look at an example for an invoice created on Jul 20, 2025.
ChargeOver will defer all revenue until the invoice is paid.
| Period | Month | Revenue | Explanation |
|---|---|---|---|
| Invoice created | Jul 2025 | $1,200 deferred | All revenue is deferred, because it has not been paid yet. |
| Aug 2025 | $1,200 deferred | No payment has been received yet, so the revenue is still deferred. | |
| Invoice paid | Sep 2025 | $0 deferred; $1,200 recognized | All revenue is recognized now that the invoice is paid. |
| Total | $1,200.00 |