What is the term for a situation where a customer purchases a product but is not yet ready for delivery?

The situation described as a customer purchasing a product but not being ready for delivery is known as a bill-and-hold arrangement. This term refers specifically to an arrangement where a seller bills the customer for a product but retains possession of it until the customer is ready to take delivery. This can be beneficial for both parties; the seller recognizes revenue at the time of billing, while the buyer secures the product without having to take immediate delivery.

In the context of accounting, the criteria that must be met for recognizing revenue in a bill-and-hold arrangement typically include that the product is completed and ready for shipment, the buyer has requested the arrangement, and the seller has a fixed commitment to delivering the product once the buyer is prepared to accept it. Thus, bill-and-hold arrangements allow for proper revenue recognition while accommodating the customer's timing needs.