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Over/under billing calculator (WIP)

Every line of a WIP schedule answers one question: has this job billed more or less than it has earned? Enter the contract, cost to date, estimated cost at completion and billings to get percent complete, earned revenue and the over- or under-billing — the number lenders and sureties read first.

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Tool 02

WIP and over/under billing check

Over-billing improves cash and hides coming losses; under-billing starves the job of cash while the work is happening. This is the check a controller runs before agreeing the month.

Contract position

Result

% complete (cost method) = cost to date ÷ estimated cost at completion. Revenue earned = contract × % complete. Over/under billing = billed to date − revenue earned: positive is over-billed (cash ahead of the work), negative is under-billed. Retention held = billed × retention %. Cash position = billed to date − cost to date.

How to use it

  1. Enter the contract value, including approved change orders.
  2. Enter cost to date and the current estimate of total cost at completion.
  3. Enter billed to date and the retention rate.
  4. Read the over/under billing and the cash position.

A worked example

A $4.0M contract forecast to cost $4.1M has $1.23M of cost to date: 30% complete, so $1.2M is earned. Billed to date is $1.15M — the job is $50,000 under-billed and financing its own work.
Want the background? The guide works through the arithmetic, the mistakes that hide problems, and a checklist.
Read: The WIP schedule →

Questions

How do you calculate over and under billing?

Percent complete = cost to date ÷ estimated cost at completion. Earned revenue = contract × percent complete. Billed to date − earned revenue is over-billing if positive, under-billing if negative.

Is over-billing bad?

Modest over-billing is healthy cash management — cash ahead of the work. Large or growing over-billing can hide a forecast that is too low, and is a liability on the balance sheet.

Is under-billing bad?

It means you have earned revenue you have not invoiced, so you are financing the owner. Persistent under-billing often points to unapproved change orders or missed billings.

What is the cost-to-cost method?

The percentage-of-completion input method most contractors use under ASC 606: progress is measured as cost incurred divided by total expected cost.

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Want this on your live data, every morning?

These tools are manual. The dashboard does the same arithmetic across every job, every company and every week — plus the money-at-risk view, the audit findings and the overrun radar. Join the private beta and we will connect it to the systems you already run.