Over- and under-billing, computed and posted
Fintra compares earned revenue to billed revenue on every job and books the difference as a contract asset (under-billing) or contract liability (over-billing) - so your income statement never overstates profit.
What over- and under-billing mean
Billing and earning rarely move in lockstep. If you’ve billed more than you’ve earned by percent complete, you’re over-billed - you’re holding cash for work you still owe, a liability. If you’ve earned more than you’ve billed, you’re under-billed - you’ve financed work you haven’t invoiced, an asset. Both need to hit the balance sheet, not the income statement.
The billing position
over_billing = max(0, billed − earned); under_billing = max(0, earned − billed)
A job is one or the other, never both. Over-billing is a contract liability (billings in excess); under-billing is a contract asset (costs in excess).
How Fintra posts the position
| Position | Meaning | Balance sheet |
|---|---|---|
| Under-billed | Earned more than billed | Contract asset (CIE) |
| Over-billed | Billed more than earned | Contract liability (BIE) |
| In balance | Earned equals billed | No adjustment |
Why leadership watches the billing position
- Chronic over-billing means cash today is borrowed from future work - a bonding red flag.
- Chronic under-billing is a self-inflicted cash squeeze you can fix on the next draw.
- The aggregate over/under across jobs is a headline metric on the WIP schedule.
Tied to the ledger
Because the over/under position is posted as part of revenue recognition, the contract asset and liability balances on your balance sheet always match the WIP schedule. There is no separate reconciliation between the schedule and the GL.
Frequently asked questions
What is the difference between over-billing and under-billing?
Over-billing means you have invoiced a job for more than the revenue you have earned by percent complete - a contract liability. Under-billing means you have earned more than you have invoiced - a contract asset. Fintra computes both from earned versus billed revenue and posts the appropriate balance-sheet entry.
Are over-billings a good thing?
Over-billing improves near-term cash, but it’s a liability, not profit - you still owe the work. Persistent over-billing across a portfolio signals you’re financing operations with billings ahead of production, which sureties and lenders view as a risk. The goal is usually to bill in line with earned revenue.
How does Fintra know if a job is over- or under-billed?
It compares earned revenue (percent complete times contract value) to billed revenue for each job. If billed exceeds earned, the job is over-billed; if earned exceeds billed, it’s under-billed. The difference posts as a contract liability or asset during the revenue-recognition run.
Where does over/under billing show up?
On the WIP schedule, per job and in aggregate, and on the balance sheet as contract assets (costs in excess of billings) and contract liabilities (billings in excess of costs). Because it’s posted from the recognition run, the schedule and the ledger always agree.
Stay in the loop
One practical finance briefing a week - new guides, checklists, and benchmarks.
Bill in line with what you earn
Start free, no card required. See your billing position per job and post it automatically.
Talk to us