Loads still on the road at month end
When a load is still on the road at month end, how much of its freight charge belongs to that month, and how a transporter records it before invoicing.
By Achekam · · 5 min read · For Logistics businesses in South Africa, Nigeria, Kenya
A truck leaves the depot two days before month end with a full load for a customer across the border. It will arrive early next month. The customer is invoiced only once the signed proof of delivery comes back. On the last day of the month, the diesel, the driver's wages and the toll fees for the first leg are already in the books. The freight income is not.
For a long-distance transporter, this happens every month, often with many loads at once. If income is counted only when invoices are issued, every month carries costs that belong with income shown in the next. When volumes change, profit lurches about. Getting this right starts with deciding what, exactly, the transporter has promised and when it has delivered it.
Three positions at month end
Sort the loads on the last day of the month into three groups:
| Position | What has happened | What usually needs attention |
|---|---|---|
| Delivered, not yet invoiced | Load arrived; paperwork still coming back | Income earned but not billed |
| In transit | Load collected; on the road | Part of the job done, part to come |
| Booked, not yet collected | Truck allocated, load not picked up | Nothing earned yet |
The first and third groups are straightforward. The second, loads in transit, is where the question really sits.
Over time or at one moment?
IFRS 15 says a performance obligation may be satisfied at a point in time, typically for promises to transfer goods, or over time, typically for promises to transfer services. Revenue is recognised when the obligation is satisfied, which is when the customer obtains control of the promised good or service.
ACCA lists the three criteria under which an obligation is satisfied over time: the customer simultaneously receives and consumes the benefits as the entity performs; the entity's performance creates or enhances an asset the customer controls; or the performance creates no asset with an alternative use and the entity has an enforceable right to payment for work completed to date. Otherwise, it is satisfied at a point in time. ACCA's article on contract assets and liabilities explains how revenue recognised and amounts invoiced are then compared.
A freight job is a service: moving the customer's goods from one place to another. Your accountant will consider whether the customer receives the benefit progressively as the load moves, which points to recognition over time, or only on arrival, which points to a point in time. The contract's terms on payment if a journey is interrupted also matter for the third criterion. Agree the answer for your standard contracts once, rather than load by load.
Measuring progress on a load that is moving
If the service is satisfied over time, the IFRS Foundation states that the entity selects an appropriate measure of progress to work out how much revenue to recognise. For a load, two measures are common sense:
- Distance: the share of the route covered by month end.
- Time: the share of the planned journey time that has passed.
Choose the one that best reflects the work, apply it consistently, and write it into your month-end procedure. For most transporters, a simple approach is enough: the dispatch system or the tracking report shows where each truck was at midnight on the last day.
A worked example in words. A long-haul load leaves two days before month end on a journey planned to take several days. By month end the truck has covered a share of the route. The transporter recognises that share of the agreed freight charge as revenue in the month, and the rest next month when the load is delivered and invoiced.
Contract assets: earned but not yet billable
ACCA quotes IFRS 15's definition of a contract asset as an entity's right to consideration for goods or services it has transferred to a customer when that right is conditioned on something other than the passage of time, such as the entity's future performance. It explains that a contract asset or contract liability is calculated simply as revenue recognised to date less amounts invoiced to date.
For a load in transit, the transporter cannot invoice until delivery, because its right to be paid depends on completing the journey. The revenue recognised for the part already done, less nothing invoiced yet, is a contract asset. For a load delivered but not yet invoiced, the transporter has done everything; the amount is earned and billing is a matter of paperwork.
Recording it in Achekam
In Achekam, the month-end estimate is posted as a manual journal: revenue for the part of each load earned, against a contract asset account for freight earned but not yet invoiced. Achekam refuses a journal that does not balance or is dated in a closed month, and a posted journal is corrected only by a reversal.
On the first day of the next month, reverse the journal. When each load is delivered and the invoice is issued, issuing takes the next number in the invoice sequence and posts it to the ledger as debtors, sales and output VAT. The reversal takes out the share already recognised, so the full freight charge is not counted twice.
The management accounts then show income and costs in the same month: an income statement for a chosen period beside the period before, and a balance sheet at period end, built from the business's own journals and exportable as PDF or CSV. The contract asset appears on the balance sheet at month end, which is where a lender reviewing working capital would expect to find it.
One consistent policy
Agree with your accountant, in writing:
- Whether your standard freight contracts are satisfied over time or at delivery.
- The measure of progress for loads in transit, if over time.
- The source of the month-end data: tracking, dispatch records or trip sheets.
- Who prepares the schedule, who posts the journal and who posts the reversal.
- Whether short local deliveries, usually completed within the day, are left out because they rarely cross a month end.
Apply it every month, including in quiet months. A policy applied only when it flatters the figures will not survive an audit.
Before the next month end
List the loads in transit at last month end, apply the agreed measure, and see how far the month's profit moves. For loads already delivered but not invoiced, read unbilled loads at month end, and for the other entries that belong in the same routine, month-end accruals for a transporter.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
