Backorder
Definition
An order you accept for an item that is currently out of stock and ship once new inventory arrives. You often collect the customer's payment before you have the product.
Want a deeper explanation?
Backorders can keep sales flowing through a stockout, but they create an obligation. Under accrual accounting the cash collected is usually deferred revenue until the item ships.
Long delays turn into cancellations, refunds and chargebacks. Watch for: backorder cash spent on other bills before the inventory lands, which leaves you short when it is time to pay the supplier.
Example
You take 300 backorders at $40 each while a container is on the water. You hold $12,000 of customer cash, but you owe them product, not revenue yet.