‘Billings in excess’ is a construction industry financial term referring to the dollar value of charges to customers in excess of the costs and profits earned to date. It is reported on the balance sheet in the current liabilities section. It is in effect, the dollar value the contractor owes back to the customer for incomplete work.
For financial purposes, this amount is important for the contractor to understand. It is a contractual dollar value owed. If not monitored and addressed, financial backers (banks and investors) and the bonding agency may withdraw their support forcing the company into bankruptcy. Therefore, it is important to understand how the amount is calculated, monitored and resolved.
If you are a contractor or the accountant, you must learn how to calculate this value, report the amount and control its financial impact. The following sections educates the reader by first explaining what the term means and how it is calculated. The next section illustrates how the accountant enters the value into the books of record along with reporting systems. Finally, this article offers some advice with tools to control and maintain a reasonable dollar value for a contractor.