Help · Guide
Underbilling is not lost revenue
Underbilling is an accounting position: earned revenue you have not billed yet. It is not money anyone owes you today. Here is the difference.
What it is
On a percent-complete WIP schedule, earned revenue is the contract value times the share of the job complete (often cost to date divided by total estimated cost). If you have billed less than you have earned, the difference is underbilling; if you have billed more, it is overbilling. Under the revenue standard (ASC 606) an underbilling is typically shown as a contract asset and an overbilling as a contract liability.
Underbilling is an accounting position, not collectible money. It can mean work you forgot to bill, but it can also mean the cost estimate is wrong: a job that is running over budget looks “more complete” than it is, and shows underbilling it will never be able to bill.
How Main checks it
When you send the optional job-cost report, Main recomputes percent complete, earned revenue and over/underbilling for each job, traces each number to the source rows, and shows where its figure differs from your WIP schedule. It never treats underbilling as recoverable money.
A worked example Sample
SAMPLE: a synthetic project with made-up figures, to show the arithmetic. Not a real company.
Job “Riverside Lab Fit-Out (SAMPLE)”: contract $1,200,000.00, estimated total cost $960,000.00, cost to date $480,000.00, billed to date $540,000.00.
| Line | Formula | Amount |
|---|---|---|
| Percent complete | 480,000 ÷ 960,000 | 50.0% |
| Earned revenue | 1,200,000 × 50.0% | $600,000.00 |
| Billed to date | from the pay apps | $540,000.00 |
| Underbilling | 600,000 − 540,000 | $60,000.00 |
The $60,000.00 is the gap between what the job has earned on paper and what was billed. Before treating any of it as billable, check whether the $960,000.00 cost estimate still holds.
What to do
- Check the estimate to complete first: an outdated estimate creates underbilling on paper.
- Then look for unbilled approved changes and work completed but left off the last pay app.
- Talk to your CPA about how the position is presented on your statements.
Sources
Check your own numbers. Upload a change-order log and pay-app lines for one project to the free check: an automated preview, not reviewed by a person.