What is Percentage-of-Completion?
How construction and long-project businesses recognize revenue as a job progresses, not only at the end.
Percentage-of-Completion: definition
For contracts that span months or years - construction, large implementations, engineering - waiting until the end to recognize all revenue would distort every period in between. Percentage-of-completion spreads revenue and profit across the life of the job, most often using the cost-to-cost approach: percent complete equals costs incurred to date divided by total estimated costs.
Percent complete (cost-to-cost)
% Complete = Costs incurred to date ÷ Total estimated costs
Revenue recognized to date = % Complete × Total contract value. Period revenue is the change from the prior period.
How Fintra handles it
Fintra computes percent complete from WIP cost accumulation against each job budget, then recognizes contract revenue accordingly - handling over- and under-billings automatically. As estimates change, it re-measures the percent complete and adjusts recognition prospectively, keeping the WIP schedule and the revenue schedule in sync for audit.
Worked example
| Period | Cumulative cost | % complete | Revenue recognized to date |
|---|---|---|---|
| Q1 | $100,000 | 25% | $125,000 |
| Q2 | $220,000 | 55% | $275,000 |
| Q3 | $340,000 | 85% | $425,000 |
| Q4 | $400,000 | 100% | $500,000 |
Frequently asked questions
When do you use percentage-of-completion?
For long-term contracts where outcomes and progress can be reliably estimated - construction, engineering, large multi-month projects. It recognizes revenue as work is performed rather than all at completion, giving a truer period-by-period picture.
How is percent complete measured?
Most commonly by the cost-to-cost method: costs incurred to date divided by total estimated costs. Other input or output measures (labor hours, units, milestones) can be used when they better reflect progress. Fintra derives it from job cost accumulation.
What are over-billings and under-billings?
If you have billed more than the revenue earned by percent complete, that is an over-billing (a liability); if you have earned more than billed, that is an under-billing (an asset). Fintra tracks both so the balance sheet reflects the true position on each job.
Does Fintra support percentage-of-completion?
Yes. Fintra accumulates job costs into WIP, computes percent complete against the job budget, recognizes revenue accordingly, and tracks over/under-billings - keeping construction and project revenue accurate and audit-ready.
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