Over/Under Billing: The One Report That Must Tie to Your Balance Sheet
· By Mike Hagberg
Your WIP schedule's over/under billing totals must reconcile to the GL — it's the first thing a bonding company verifies, and a growing gap means your job costing and your books are drifting apart.
Over/Under Billing: The One Report That Must Tie to Your Balance Sheet
When a bonding company reviews a contractor, the WIP schedule gets read with one specific question in mind: does the over/under billing total reconcile back to the balance sheet? If the job-level numbers and the general ledger disagree, every other number on the statement loses credibility.
What the report says
For each open job, over/under billing compares what you've billed against what you've earned (revised contract × percent complete, cost-to-cost):
- Over-billed — billed ahead of the work. Good for cash, but it's deferred revenue: you owe the work. Watch it company-wide; over-billings beyond ~10% of annual revenue is a cash-timing cliff at close-out.
- Under-billed — work performed but not yet invoiced. An asset on paper, but often the first symptom of un-billed change orders, slow billing cycles, or scope creep being absorbed silently.
Always compute against the revised contract (original + approved change orders). A job that looks over-billed against the original contract is frequently on-pace once approved COs are counted — and alerting on the wrong base erodes trust in every alert after it.
The reconciliation that catches drift
Sum (billed − earned) across all open jobs. Compare it to your GL over/under-billings account. The two should match within a rounding error. A persistent gap — say, GL shows $203,796 while the job schedule sums to $188,000 — means costs or billings are posting to one side and not the other. A growing gap means it's systemic.
How DataXcel watches this for you
The CEO Briefing's Over/Under Billing category scores every open job's billing position against the revised contract weekly, surfaces the four loss-warning signals (underwater jobs, over-budget watchlist, margin erosion, missing contracts), and flags when the job-level WIP total stops tying to the GL — under both the WIP and Bookkeeping categories, because a reconciliation break is both a billing problem and a books problem.
Your surety checks this once a year. You should know the answer every Monday.