Underbillings

When a contractor bills for less money than they have earned for work completed, as determined by the WIP schedule or the over/under billings report,  underbillings occur. For example, the project is underbilled if a contractor has only billed 25% of the job's projected revenue but has already experienced half of the estimated costs. Construction CPAs and sureties often regard underbillings to be unacceptable. Significant or ongoing underbilling can result in negative cash flow and signal a variety of additional problems.  Poor accounts receivable administration, imprecise estimating, or a significant number of unapproved modification orders are examples.