Common Underbilling Scenarios: Scenario(s) 3
On to Scenario 3 or the "Really? Are you sure?" scenario. This scenario often results in significant changes to total estimated cost. In...
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Common Underbilling Scenarios: Scenario(s) 2
In this lesson we'll cover the second common scenario with underbillings, the "nothing to see here folks" scenario (2). Let's get to it!...
Common Underbilling Scenarios: Scenario(s) 1
It's December X3 and you just started a new project. You’ve incurred (and recorded) costs on the project but didn’t get around to billing...
Four common scenarios I see with underbillings
A question that always comes up is "How do I know if I'm calculating work in progress (WIP) correctly?" Unfortunately, we'll never really...
Completed Contracts Method of Revenue Recognition
Two points I want to emphasize with completed contracts method of revenue recognition: Billings to date and cost to date on open projects...
FREE SHIRT! (U.S. ONLY, FOR NOW)
I ordered some shirts with the Percent Complete logo! Who ever comments first below wins one!!! I haven't looked at international...
Illustration of an expected loss on a project
Unfortunately, not all projects make money. You've got delays, the project owner is throwing a fit, the site conditions are unruly, etc....
"Don't fear the overbilling" by Blue Oyster Construction
Yes, overbillings reduce revenue. Yes, overbillings are a liability. BUT, they're not bad once you understand them more. Brief overview...
Unallocated Job Costs
Chances are you have unallocated job costs. Usually it's from repairs and maintenance on equipment or vehicles, fuel, insurance or...
The WIP Adjustment/Journal Entry
It's recommended that you create three accounts to record your over/underbillings: Underbillings (Asset/Balance Sheet)- Current Asset...
Working Capital, Working Capital, Working Capital
If you haven't figured out the topic of this article, yet, I'll give you a hint, it's about working capital. What is working capital?...
Prior period adjustments
It's January 2024 and you found a new CPA for your annual review for 2023. You hand the new CPA the 2022 year end review with financial...
Cash Flow by Job Worksheet
There are many ways to calculate cash flows by project. I've seen some pretty complicated worksheets out there so I've put together a...
Do you know how you’re recognizing revenue? Here’s how to check and what it means.
A lot of contractors recognize revenue after every billing. Meaning, the entire amount of that progress billing you just sent out for...
How do you know you're calculating WIP correctly?
You'll never really know if you're calculating WIP correctly. That doesn't mean you should lose all hope. There are three things you...
What goes up, must come down
Don't get too excited about your income statement if you have unadjusted WIP on your books at year end. WIP needs to be adjusted by year...
From Open to Close: The Cycle of WIP
Time for a demonstration! Even if you're pretty familiar with how WIP works, it's always helpful to run different scenarios using the WIP...
Your First Year Reporting WIP: Different Presentations
So, you’ve decided to prepare a WIP schedule this year and to make all the necessary journal entries. That’s great! I typically see two...
Best Practice: Billings and Costs on Small Jobs
The approach to recording billings and costs on small jobs is a bit of grey area. Some companies create separate project IDs for every...
Number your accounts. Trust me. It will make things easier.
I know there is software out there that allows you to create your chart of accounts without assigning numbers. That's great, but it's...
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